Long weekend, weak open

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Have I mentioned that I hate long weekends?

The market was closed Jan. 19 for Martin Luther King, Jr. Day, so now we have to work through the confusion of having no trading for three days.

In this case that means — did it mean anything when corn prices were up Friday and soybeans were even, or was that nervous traders getting even for the long weekend? Does it mean anything that prices are lower in early trading Jan. 20, or is that just the traders getting back into positions that have been mostly negative since the Jan. 12 reports from USDA?

I was encouraged by prices Jan. 12. The final crop production numbers came in, along with some other projections, and the market was friendly to corn for the first time in a while.

March corn futures finished up only 13⁄4, but were up nearly 7 cents in early trading. They had an amazing 6 cent range.

March soybeans closed down 361⁄4 cents after the report, but had a range of 46 cents.

Short spike

My encouragement with the corn did not last long. Prices turned around late in the day of the report, then kept going south.

By the time we got to the $3.71 low of the 15th, we were 36 cents from the report high and 46 cents off the recent high. Try to buy corn at these prices!

The March beans have lost more than 70 cents from the recent high. March Chicago wheat futures are now a whopping $1.473⁄4 off the high made back on Dec. 18.

The chart has had no ups and downs, just downs. It is hard to explain why corn prices are so negative.

The soybeans I understand more; we are carrying a large inventory after the big crop, even though exports have been larger than expected.

We are headed toward the Brazilian harvest, which is record large if the projections hold up. The second new crop of the year starts in a month and traders don’t care if American farmers move soybeans.

The processors care, and are pushing basis, but that is another matter. For the American farmer, it is hard to be interested in selling grain at these prices. $8 corn and beans in the teens have produced returns that left money over to buy bins to store grain in cheap years. We seem determined to hold grain until summer.

Confusing market

As long as everybody holds, the traders know that the supply is there and has to come to town sometime. This creates a market that is confusing to the farmers.

They think the holding has to increase prices. In fact, it ensures that there is a ceiling because we actually squeeze a lot of trading into the end of summers, when the farmers give up and move the grain.

Crunch time

So now is the crunch time. Grain usually moves freely in January, after the tax rollover to another year. It is not moving much.

Many elevators saw so much farmer holding that they did not get full at harvest after loading out some early-traded trains.

Now they are looking for what the elevators call the second harvest, and it is not happening with the prices being even cheaper than a few weeks ago.

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Marlin Clark is an associate of Russell Consulting Group, with a local office in Williamsfield, Ohio. Comments are welcome at 440-363-1803.

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