Turbulent market leaves grain buyer scratching his head

I should have learned by now. I have been bitten so often. Once bitten, twice shy.

The thing is, the proper answer for almost any question I get these days should be, “I haven’t got a clue.” I need to get this fixed in my mind and not get tempted by the action of the Chicago Board of Trade for the last few minutes.

Yesterday about 10 a.m. would be a good example. The corn was up a nickel on the overnight after a weekend. But, when the day session opened, we were trading only up a penny to two and a half. I was trying to get some basis contracts priced, and I warned the farmer that we were seeing some negativity.

Surprise

So, I should not have surprised me that, by the end of the day we were up 12 cents. Clearly, I don’t have a clue. As usual the after-the-fact pundits that populate our business have a reason for the bounce–excessive moisture in South America. Add to that some talk of a wet spring in this country.

The South American weather I get. Maybe we don’t get as big a crop of corn or soybeans as we have projected. That should be good for prices. The wet spring here I find humorous.

Weather forecast

A five-day forecast on the North Coast is a joke, so a two-month one is pure speculation. The annoying thing is, eventually prices turn around, and eventually we look at the charts and the news and make sense for why the turnaround happened.

On the corn chart there was no particular signal until after the bounce started, so this is all fundamental hype. It may be valid, and the market is certainly looking for an excuse to turn around. Add to the hype the fact that a little rally got us above the 20-day moving average for corn, and we set off a firestorm of buying for people watching the charts.

Traders jump

In the process of jumping on the bandwagon, the traders took the March corn contract to a 5-week high. Now we are looking around for a reason to go higher. Will it be exports? They remain below the USDA projections for the corn balance sheet reflected in their Supply and Demand Report.

The soybeans gained 16-1/2 cents in the March contract. Initially they were helped by the corn rally, then the implications of the wet weather in Argentina and Brazil kicked into gear. Now we are near a 33-percent retracement of the bear market we have been struggling with. That is, we had a high in October of $10.78-1/2 and a February low of $9.00. We closed near $9.59. The technicians who follow retracements look for 33 percent, then 50 percent, then 66 percent. 50 percent would be 9.89, a long way off.

Projections

However, in the case of soybeans, we are on pace with USDA projections. This week’s exports were well above the needed pace. So, we are watching weak technical signals that are just emerging, but real fundamentals are still a month off.

The next big news is projected plantings, out the end of March from USDA. If low prices compared to input costs limit corn acres, we can get some pop in the market.

No clue! If traders bet now that we will get smaller corn acres, it will be in the market before the report. In any case, I am already on record. Don’t bet the farm on my opinion–I don’t have a clue!