Short week may make erratic markets

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The most notable feature of this week on the Chicago Board of Trade is the lack of trading hours. The trading will stop after the day session Wednesday and not start up again until 9:30 a.m. EST Friday. Then, Friday will only see three and a half hours of trading before we stop until Sunday night again.

Short trading hours

The short hours will also be complicated by some lack of traders this week. It is normal for some traders to take time off to travel for the Thanksgiving holiday, so that even when trading is open, the numbers of traders will not be normal.

It is hard to anticipate what the short week will do to prices. Early Monday trading has March corn futures down over 2 cents, January soybeans down eight cents, and March Chicago wheat futures up a penny.

Corn

Corn prices have been a little higher in the last week. The March contract hit a high Friday of $3.941⁄4 before retreating. The retreat was termed “profit taking,” which happens more easily on a Friday.

Now we are trading more than a dime lower than that high. The contract high was made at $4.011⁄4 in the middle of November, as the worst fears about the delayed harvest were being talked up. Not the weather is termed by one consultant as “slightly troublesome” (CHS Hedging), but there is not much harvest left.

Soybeans

The elevator people hope that what is left comes to town. Ohio elevators have received more beans than normal, but less corn.

There is a lot of speculation about the causes. The beans come off wet, so it might have been expedient both in time and money to take them to the local elevator. The turn-around was quicker, and the drying charges and shrink were less than processors’ percent-of-price discounts for moisture.

In the case of corn, the elevators started out empty, and the first flush of harvest went right back out. Farmers have been sitting on all the corn they can, remembering prices that were twice this high in recent times. If the bins are full, the last of harvest will go to the elevators.

Basis prices

With the beans going to the elevators, and the corn staying home, processors have pushed basis quickly, and elevator basis is better than normal for corn. Ethanol processors have had good margins, and stand ready to compete for corn if they need to. In some cases last spring’s contracts made for new crop corn and keeping them with adequate supplies. In other cases they have trains coming from elevators.

Sooner or later the corn moves off the farms. There is a huge crop, so any basis push will be temporary. We in the cash business may struggle to get corn in December, but after the first of the year normal movement will probably start, regardless of price.

Corn in the fields

Locally, there is a lot of corn left in the fields. Fields are sloppy now from snow melt and rain. Farmers in North Central Ohio got combines moving Sunday. It remains to be seen when we get the last push going farther to the Northeast.

Corn stands better these days, but the 40-mph gusts we are getting in Wayne Township, Ashtabula County this morning are going to test the stalk strength. A lot of the remaining corn has been high enough moisture that the delayed harvest has been a mixed blessing. It is hard to spend a lot of money drying $3.25 corn.

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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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