Negative market influences add up


Just add avian flu to the reasons we can’t seem to catch a break in the grain markets right now.

Last week, the Farm and Dairy reported in a front page story the outbreak of the flu in a third turkey flock in Minnesota. Yesterday, the disease was confirmed in the first chicken flock, which was in Jefferson County, Wisconsin.

Few things worry a poultry producer like getting this ailment. Few things spook the grain markets like the specter of mass depopulations of birds.

Lower prices

The idea that the demand for corn and for soybean products could be suddenly shaken quickly translates to lower grain prices.

Add this worry to the U.S. Department of Agriculture’s Planting Intentions report, which did not cut the expected corn acres, let along surprise us with low acres.

Mix in a strengthening U.S. dollar, higher crude oil prices, and weekend rains in the Southern Plains that are lessening drought worries in wheat country, and you have a bearish grain scenario.

Corn has now moved lower for six consecutive trading sessions, although it is higher on this (hopefully) turnaround Tuesday (April 14).

In early trading we are up a penny at $3.71-1/2.

This is lower than the April 1 low at $3.74. Only the contract low of $3.67 on March 15 is lower. The recent high was $3.98-1/2 on the morning before the Planting Intentions report, when we could envision a bullish report.

Ugly day

After the report, we traded to a $3.76-1/2 close, down 18-1/4 cents. That was an ugly day!
We actually bounced higher for two days after the report, and after we digested and rationalized it.

Then, other factors were focused on, and we have been lower. The good news is that there is good support at the contract low.

The bad news is that, if we go through that low, we have little support.

Helping the market a little is the weather, which has delayed planting in the Eastern corn Belt. We have now started Monday afternoon USDA Crop Progress Reports, and the first one shows corn two percent planted compared to three percent last year, and an average of five percent.

Delayed planting

The farmers are using delayed planting as an excuse to continue to not sell corn. It has been hard to face the reality of the low prices this year. Elevators all over the country bought corn before the acreage report on basis, with the elevator buyers and the farmers both betting that the board would improve after the acreage was released.

In fact, the acres were high and the price decline has everyone unhappy, except the feeders.
Oddly, even at these prices the exports last week lagged behind what is needed to meet USDA supply and demand expectations.

Trade figures

We sent out 855,000 MMT of corn, but need a weekly pace of 1.1 MMT. The government is anticipating a year’s export of 1.8 billion bushels, and some experts have said that number will turn out to be low.

That would be nice.

The cure for low prices is said to be low prices.

One reason is that the demand for cheap grain is better than the demand for expensive grain. The soybean exports, meanwhile, continue to confound the experts.

We exported 450,000 metric tons, but only need to average 179,000 a week, since we have sold so much already for export. USDA had expected 1.79 billion bushels for export.

So, marketing decisions continue to be hard. Prices of corn especially are cheap, but betting on bad weather to help the prices is betting against your own ability to produce, and seems counter-productive.
Ohio. Comments are welcome at 440-363-1803.)


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