The hunt for price direction continues

The grain markets have remained volatile on the Chicago Board of Trade. We are still looking for a direction to declare itself, but we have slipped lower while we are looking.

So far we are ignoring the lower prices, hoping they are not the new direction, but just more uncertainty. It was exciting Tuesday morning, Dec. 29, to see soybeans up eleven cents.

You could get excited about that, until, that is, you remember that they were down more than ten cents Monday!

Price swings

So, just more erratic prices? We don’t know yet. Wheat was also up a nickel this morning, but the corn is just one tick lower, and not what we hoped for. The folks are mostly back on the job in Chicago.

The electronic trading that we now live with may not reflect the small groups in the pits that we used to see between Christmas and New Year’s.

Still, there is that palpable sense that things are not in full swing until after the first. With the holidays have come lower prices, even if I am hoping they are not a trend.

New lows

March corn futures put in a new life of contract low early Monday at $3.60, putting an exclamation point on five straight days of lower prices. Soybeans were down for five trading days, also, until the bounce Tuesday morning.

The bounce in wheat is the first in seven trading days. Wait, maybe there is a trend. …

There are reasons that the corn prices are soft. The corn exports continue to lag the projected rate. We moved out 22.5 mbu this week, and that was the low end of expectations. We are now 9 percent behind for the year, if we are to meet the U.S. Department of Agriculture projections.

Then comes the Chinese, with news that they are lowering domestic prices (they can do this in a government-controlled economy). Their reserves have built up, and they are trying to move them.

In addition, they have filed anti-dumping claims against the U.S., claiming that we are selling DDG’s below fair market price. This could result in tariffs that hurt our sales to them.

The soybeans had moved lower on news of better whether in key areas of Brazil. This morning, however, we had talk of that weather getting dry, so prices rebounded.

The higher prices were also a bounce off the support level of $8.60 January futures.

So, soybean support held, corn made a new low. The wheat markets traded lower on news of good weather and improving crops in the Plains. Then, we had bad weather including tornadoes and thunderstorms, and wheat has bounced this morning.

Unfortunately, it is hard to get bullish too soon, as the spec funds have added to short positions in corn and beans.

Going lower

This is an indication of market prices going lower, but we have to remember that the funds are fickle, and can turn on a dime. All this means that the magic numbers are getting away right now.

Farmers are holding grain, looking for $4 corn and $9 beans. We get a little closer, then we pull away. As the new year starts, seasonality says we will be modestly higher. I hope that is true this year.