Three major commodities, three different trends

sweet corn

Regular readers know that I hate talking about December through February markets. Actually, I started complaining about the period between Thanksgiving and Christmas, and it has just been getting worse.

First, I was just wrong. That’s the word you don’t read in other marketing columns that lets you know I have some integrity. I was wrong because I said nothing would happen, and then it did — up and down and up and down.

Then, I said nothing would happen in January, and I was mostly right, but there was a lot of volatility, as the traders kept trading minor weather adjustments in South America.

We “killed” the crop in Argentina and then overreacted when they got some rain. Next, we talked about how much smaller the crop would be because of rain, before realizing we did not need all the rain, so the crop would not decrease as much as the rain did.

Finally, we managed to use the same rain forecasts to hurt corn prices and help soybean prices. All these things just remind us that we sometimes are struggling to explain the markets after the fact. If we really knew what was going to happen, we would just trade the futures markets and not bother to even comment to the public.

When you have equity and futures traders buying ads to sell you advice, you have to wonder if they are taking the risk-free move to sell advice instead of trading commodities and equities.

All of this reminds me of how I got out of speculating on grain futures. I found myself managing the grain position at a small elevator. I was using one side of my brain to spec in my own account while I was using the other side of my brain to hedge for the elevator. I discovered my brain was not that facile, and my paycheck was based on acting for the elevator.

So what trends did we see last week, either real or imagined?


In corn, we had bullish news without a bullish reaction in the market. We made sales to China, had continued weather problems in South America and had good export sales, yet the March futures contract went down four cents last week.

We had a further decline of three-quarters of a cent on the March contract Feb. 6. The close for March futures Feb. 6 was at $6.781⁄4, right in the middle of the recent range from $6.611⁄4 to $6.883⁄4.

On the chart, we are seeing a pennant formation, sometimes referred to as a coil. As this tightens, we run out of room on the chart for staying within the recent trading history. The chart “has” to start an uptrend or a downtrend.

The current opinion is that, if bullish news does not make the market go higher, we will probably go lower in the near future.

Currently, corn exports are only at a rate two–thirds of the pace of the five-year average. China had bought very little, but bought almost 320,000 tonnes this week, the highest since May. In the Argentina weather watch, we see a little rain, a big raise in condition reports, but still only to 22% good and excellent.

More good news, for us, comes from Ukraine, where it is reported that grain production could be down a third this year. I cannot understand how the farmers there could even get this much produced.


Then, we have soybeans, where we had a lot a volatility for the week and held on to some gains. There was good news, and it showed in prices. Our exports are ahead of projections.

The Brazilian currency went up in value, making their crops more expensive versus ours, although some estimate that our soybeans still cost an extra dollar a bushel delivered to China. Remember, we are approaching the early harvest part of the South American year that starts in Northern Brazil.

Once their beans get rolling, China will source supplies from Brazil. The weather has been better in Brazil, and it improved last week. The soybeans gained in condition ratings by 17% in three weeks. Still, our balance sheet keeps getting tighter.

The January report predicted a carryout at the end of the 2023 marketing year of 210 million bushels. Now the report out in a few days could have that at closer to 200. As long as this number stays around 200, we will see firm prices.

That gets us to wheat, which gained six cents last week and added almost a penny Feb. 6. Still, even with a slight improvement in trend in the wheat, One major commentator said that there is no real news in wheat.

This, while we are waiting to see what major abandonment we might see as the wheat comes out of dormancy.


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