Traders blame Trump for lower grain prices

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White House

Prices were lower on the Chicago Board of Trade Monday, Jan. 23, and our new President got the blame.

If you are a news junkie like me, you are used to the media blaming President Donald Trump for everything, including your new batch of acne. So, it should come as no surprise that the dime down on soybeans Monday was blamed on him.

The lead paragraph in the CHS Hedging letter this morning says, “President Trump signed an executive order on Monday to leave negotiations on the Trans-Pacific Partnership (TPP). Many in the Ag sector are distressed by this order as they say this pact would have provided a $4.4 billion boost to U.S. Agriculture.”

Interestingly, the CHS afternoon letter Monday credited the Trump effect of the withdrawal from TPP for the slide in the price of the dollar.

We are now lower than we have been since mid-November. The lower dollar makes our goods cheaper overseas, and helps exports.

So which of two opposite effects is the TPP news causing? Let’s just blame both of them on Trump!

Soybeans

The negative trading Jan. 23 got the soybeans retreating from the slightly higher new high made last week. A little follow-up this morning has the new high looking like a confirmation of the old high.

March soybean futures hit 10.80 March on the 18th, then went lower for four sessions. Currently we are trading 10.56 1/4 on Tuesday morning, Jan. 24, down one and a half for the day so far. The old high was at 10.74 the end of November, so we dropped 80 cents, then gained almost 90 cents before we broke it off again.

Corn markets

The March corn contract technically made a new recent high, but like the soybeans, it really looks like a confirmation of the old high after we have broken a little on Tuesday. Here the high was a little later, at 3.70 on Friday and again on Monday the 23rd. Currently, we are down almost two for the day, at 3.67 3/4.

The experts are saying that March corn will make a run at 3.75 to 3.80, but that it will be a hard play. And, it’s not like that target is a long way away. We still struggle with large supplies of corn and not enough reason to price it higher.

The farmers rewarded the market as it moved higher, but farmer selling was slower Monday, and will likely stay that way until the sellers get spooked by lower prices or see gains.

The soybean prices seem to be steady, with the South American weather helping crops there. Outlooks from the experts have kept the crops the same. This comes even as last week the talk was that crops would get smaller.

Exports weak

Meanwhile, the exports, which have been supporting the market, are remaining disappointing. The corn was OK this week, but has met expectations only one week in the last 15. We need to export 1.2 mmt a week to meet USDA projections, and that has not happened. Wheat and beans are worse than corn.

Look for revisions in export numbers the next time we do a world-wide supply and demand sheet.

Spec trading

The hard news in the market has to do with a large open interest change in soybeans and a small one in corn. Traders have increased open interest in soybeans by 92,000 contracts in just five days. That is the biggest five-day gain ever, and now has specs 120,000 contracts long.

Spec funds, meanwhile, bought 2,000 corn contracts, to reduce their net short to 41,500 contracts.

It would be easy to think that this spec trading is a bullish indicator. There is another way of looking at it, however. Specs got this bullish and the prices still barely made new highs, then declined back below them. And, to make it worse, the specs are fickle. They can reverse this position anytime, on a dime.

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