Grain markets running out of breath

temporary corn storage
Temporary corn storage is a necessity for many Ohio farmers and grain elevators this year.

Jump in the pool. How long can you hold your breath?

Grain traders have been waiting with bated breath for more than three months now for a trade deal with China to be realized. Way back at the G-20 meetings in Argentina in the end of November, the Americans and Chinese made big news by promising to make a deal in the coming three months, which ended March 1.

That date has come and gone, and further dates have also been mentioned, then discarded. First we were told that the Chinese president would travel to Mar-a-Lago, the Southern White House, the middle of March.

Then we were told it would be the end of March. Some sources said March 27 was the date, others said no date had been formalized. Whatever is true, last week we were told that the March date that may or may not have been formalized was now canceled.

Looking ahead

Now we are told something will happen in April. During this time of uncertainty, we have seen wild tales of what could be agreed to. The best one is that the Chinese will buy $50 billion in ag products a year for six years, and at the end of the period the trade deficit would disappear.

This is several times what we have ever done, so is dubious, if exciting. We understand that the Chinese want big ag business, but are struggling with the idea of even admitting that they are stealing several hundred billion dollars a year in intellectual property.

It appears that the presidents of both countries are willing to let underlings do the heavy lifting, but will only get together themselves for a formal signing ceremony.

That is fine, as well, as the ceremony is soon. We should be patient, it would seem. The longer this drags out, the better possibility that the U.S. held out for a good deal. In the meantime, the markets have traded to their recent lows, with support not holding on corn and soybeans.

Getting frustrated

Traders who have supported prices on optimism of a good trade deal are getting frustrated, and have come up for air.

Let’s look at prices. Soybeans have been considered, until recently, overpriced, with traders believing the hype of a big trade deal. Not so much this week. This Tuesday morning, March 12, we are trading May soybean futures at 8.92, down two cents.

That is right at the low we have hit the last two days. It is almost 53 cents below the Feb. 1 high, and another dime below the Dec. 12 high, at 9.411⁄2. November futures are similar, but higher.

We are trading just under 9.25, right at the new low made on Monday at 9.241⁄2.

Bouncing around

That price represents a 39-cent loss from the last high of 9.231⁄2 made two weeks ago. On Dec. 12 we were even higher, at 9.71. Now, the corn. May futures are currently trading a tick above 3.63. The new low, made Monday, was 3.611⁄2.

That is nearly 25 cents below the late February high of 3.873⁄4. We had a December high of 3.873⁄4. On Dec. 14, we were at 3.95. We had three highs, each slightly lower, than a sharp drop to a new low.

December corn futures are similar. We are trading 3.871⁄2, up a penny. Monday we made a new low at 3.861⁄4. We traded 4.06 in the middle of January, and had hopes of staying above $4. This is a market that has run out of air. May wheat futures are tradaing 4.39-1⁄2, up 11 cents, and smelling “Turnaround Tuesday.”

The trend has been lower almost every day since Dec. 13, when we closed at 5.26. Most of the news has been negative, and the market has failed to gain when news looked better.


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