News nudges corn and wheat to highs

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News from U.S. and world sources has helped corn and wheat prices to new highs in recent trading. The soybean markets are trading in the middle of the recent trading range, however.

Speculation about Russian wheat exports seems to be the cause of recent price jumps in the Chicago wheat futures. This time the issue does not seem to be the political unrest in Ukraine, but merely the idea that the Bear might want to limit exports because to the low value of their currency to world currencies.

Russia is being hurt by the drop in world oil markets, since their economy is so dependent upon oil exports for vitality. Recently the U.S. dollar exceeded 59 rubles on the Moscow Stock Exchange. This was the weakest ruble in history.

Cheap crude

At 8 a.m. this morning crude oil was down $1.80, at $54.46 a barrel. Compare this to the $115 per barrel of a few months ago. Our gasoline price has gone down $1.10. Good for us, bad for them.

Crude is now cheap enough that analysts are now getting negative and talking about recession in parts of the world.

The cheap crude is good for us in the long run and the short run, although the case needs to be made that really cheap oil limits our own domestic activity in the oil patch. It is not nearly so exciting to spend the money to extract oil from shale at these prices.

Grain watch

March Chicago wheat prices had made a high at 6.11 3/4 on Dec. 2. Prices then declined to 5.72 3/4.

Now we have made a new high on Monday, Dec. 15, at 6.22 3/4, and followed that up with a high of 6.28 1/2 March futures on Tuesday morning.

Meanwhile, corn prices have been a function of demand for ethanol and reaction to USDA reports. Weekly ethanol production is at multi-year highs. We are currently up 26,000 barrels of ethanol a day. This, after I have said that the help for corn would not come from increased demand at the ethanol plant. Seems like I was wrong.

March corn futures made a new high back in the middle of November at 4.01 1/4 after USDA cut the production number slightly.

Now come the Dec. 10 USDA reports that cut carryout by 10 million bushels. USDA did this by increasing the food, seed, and industrial demand portions of the balance sheet. This is not a lot of bushels, but it was in the right direction, and it was a surprise.

The trade guess for carry out was 2.027 billion bushels. USDA now says 1.998 billion.

After the report, the market worked up to a new high Monday of 4.12 1/2. Currently on Tuesday we are trading March at 4.10.

Beans not moving

The January soybean contract, as I said, is trading in the middle of the recent range. The recent high was 10.86 1/4 back on the 12th of November. We dropped to a low of 9.83 3/4 on Dec. 3. Currently we are at 10.32 1/4, 54 cents off the high.

The news is just not encouraging for the beans. Farmers that put the grain in the bins and held on for higher prices are now looking forward to January and thinking they need to move some grain. A lot of the cash grain being contracted now is for January delivery. Grain needs to go to town just to get the logistics for the year in progress.

There is no big bullish news, just minor corrections. The grain needs to move sometime, and now we are rewarding the recent gains with sales.

We can’t move all the grain in July, and prices may not be better then, anyway.

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