The market letters circulating currently are concentrating on South American politics and weather, and on the Thanksgiving holiday. These dominate prices in the absence of other, more direct, news.
Thanksgiving week is always interesting because there are known price trends that develop for the week as a result of shortened days and hours. The market trades normal hours through Wednesday, then close Thursday. Friday is shortened, with the CBoT closing at 12:05 Central time.
For corn, prices have been higher for the week of Thanksgiving nine out of 15 times. Beans have been higher 10 times, as have the wheat prices.
South American politics are being closely watched right now. Argentina has used a run-off election to put in Mauricio Macri as president. This is notable since he has promised to both lower export taxes on grains and devalue the peso. Both would make their grain more competitive in world markets.
This is not a small matter, since Argentina is thought to have more than 10 mmt of beans in on-farm storage. Current export taxes, to be cut 5 percent a year, are at 20 percent for corn, 23 percent for wheat, and 35 percent for beans. I am glad we don’t have anything like that to contend with!
The combination of Argentine news and the USDA’s announcement that we have a record soybean crop have has given us a contract low on soybeans. January futures hit 8.45 1/2 overnight going into this morning, Monday. Crush margins have dropped. The December meal contract made a new contract low at $279.20 overnight. The good news is that we have bene trading a fairly narrow range, moving sideways, since early November. The bad news is that it is hard to see a reason for prices to improve out of that range, except just for a bounce off the low.
Similarly, the corn futures dropped in early November, and have been mostly sideways. Look carefully at the chart, though, and the highs are slowly improving. There is a glimmer of hope here, especially as it comes against the pull of the beans. December futures got as low as 3.56 on the tenth, but are now trading 3.62, down a penny and a quarter so far this Monday.
I said that weather was a focus right now. NOAA says that a key area of the eastern Pacific Ocean has reached record high temperatures last week. This is fuel for the global warming crowd.
For us, it brings the idea that the West Coast could be wetter, which they need, but the Midwest could be dryer. The timing and the geographic definition of this is critical. Will the dividing line between wet and dry be west of Iowa or east?
If we in the Eastern Corn Belt (or off the fringe, depending on the map you see of the Corn Belt), are dryer in the spring than last year, it will be a relief. If we are dryer in the summer, it will be a disaster.
Remember, if global warming were true, it would, in general, add to the agricultural productivity of the world, not reduce. For those of us who believe in cycles, remember that the Norse farmed in Newfoundland and Greenland until the weather trends became too cold. We have given up farming in Northern Michigan and areas of the Canadian Plains that used to be cropped.
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On a historical note, Thanksgiving was declared to be a federal holiday in 1863 by President Lincoln. He was responding to a 20-year campaign by a woman named Sarah Josepha Buell Hale, who wrote the sitting president each year to lobby for it. Her previous fame was in writing the nursery rhyme Mary Had a Little Lamb.
The holiday was created during the worst of the Civil War when Thanksgiving was sometimes an act of will. It is interesting that many people today like to think that Thanksgiving is not a religious holiday. Makes you wonder just who they think they are thanking?
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