Spring markets off as the weather


The weathermen say it is spring. It must be. The sun finally set on Windsor Road in Ashtabula County once more. That happens twice a year. When the snow melted off the stone walk behind our house, orange crocuses appeared.

The violet ones in front of the house are still buried from the last avalanche off our steel roof.

Spring means recovering from turning the clock ahead, to Democrat time, as Oliver Webber, local character, used to say, remembering the war years and Roosevelt, and the beginnings of daylight savings time.

Of course, he is not here anymore to check with. Maybe when you turn the clock ahead you are going back to Republican time! I never got that straight.

Traders confused

What I do know is that, just when I predicted that we would continue to drift lower into the March 31 Planting Intentions Report from USDA, we put on a four-day bounce that has traders scratching their scalps where the hair used to be before they started trading grain for a living.

Blame it on the lower dollar, blame it on the lower crude oil prices, heck, blame it on the rain, as that song used to tell us.

Just don’t blame it on me. This is the time of the year when I can quickly revert to my best Sergeant Schultz impression: “I know nothing!”

What I do know is that my assumptions have changed. I used to think that, if we traded lower into the report, any news would be seen as good news. It was just a matter of how big the bounce would be, barring a huge surprise. Now I guess anything can happen.

Our expectations

We have long anticipated that the Planting Report would show significantly lower corn acres, and a corresponding rise in soybean acres, unless enterprising farmers had an excuse to go buy equipment and fire up cotton farming again, or something else.

Maybe total acres planted would just decline and lower prices put some marginal land back into permanent pasture where it belongs.

What we have speculated about is just how big the acreage change would be and, more importantly, how may acres were “in the market.”

That is, what acres are the traders currently assuming as they gamble on future price levels.

Will be interesting

So, with the bounce I can now see reason for higher prices, sharply higher prices, or lower prices. Next Tuesday will be interesting, no matter what. We can only hope that the rest of the week is interesting, too. It would be nice to go higher, then see some follow-through.

Of course, it would be nice if farmers would decide to fire up and sell corn.

I am starting to feel like the Maytag repairman in those old ads, where he was getting lonely because the Maytags didn’t break down. I notice that beans are going to town a little more quickly, with the better prices.

All the South American talk and all the bushels there have depressed prices. Beans normally don’t improve a lot this time of year, so some sales have happened.

Just make sure that the free DP that is being offered does not con you into a false security. Prices will be better some day. Trouble is, that day could be in 2018!

The bounce

How big was the bounce? May corn futures moved from the low of $3.67 on March 18 to a high early on March 23 of almost $3.92. Looking at the chart we see something interesting about that low.

That is, you can connect a support line from the March 18 low to the one at $3.86 on the March 12, and to one way back Jan. 30 at $3.73-3/4. What that means is that the bounce may just be a technical correction to preserve the downtrending support line.

Similarly, the May soybeans had a major low of $6.61-3/4 on Jan. 30, then a high of $10.39 March 3, before a double low march 17 and 18 at $9.53-1/2. We bounced from that to $9.90 after four up days. Currently we are at $9.81.

The May wheat futures are the weakest, relatively. After a high on March 23 at $5.40-1/2, we closed at $5.34. Today, we are at $5.27-1/2, down six and a half cents.


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