Grain prices are consistent, but cheap

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(Farm and Dairy file picture)

I have to report that as I am writing this all three major grains traded on the Chicago Board of Trade have traded to new lows. This happened on the overnight trading, but we have had no rebound.

The best I can say is that all three are trading together right now, and the cycles have been very predictable.

There is no way to cherry-coat the fact that we are in the doldrums of winter, looking for something to perk up our attitude. What we are getting instead is a major snow storm and the lowest grain prices for months.

Good news

The good news is that we are, after all, in the winter season in a notoriously winter-like climate. And, if we are at the bottom of the price cycles, we can anticipate higher prices as we cycle back higher.

That has been the pattern for months. Repetitive trading cycles are the result of a lack of news.

Nothing has really changed. The cycles can tell us what the mood of the market is over time.

Take May corn futures, for example. The chart shows a low Dec. 1 of 3.49-1/4. From there we went up and down fairly regularly, with the highs gradually getting higher until we made a high Feb. 16 at 3.87-1/4.

At this point there was a lot of optimism in the country. Maybe $4 corn was in the future after all.

May corn took a hike, dropping to 3.67-1/4 by the end of February, and the mood was different. Farmers thought, if they could just get another chance, they would look at selling.

Rebound

Indeed, the market rebounded up the next cycle to get near the old high, at 3.86-1/4 the next day! We closed sharply below the high, however, at 3.73-3/4.

This meant that only those with targets in place on the run-up got any sales off, and most targets were higher.

We were teased by another rally for four days, but a sharp drop since then has us back to the ugly reality that May futures have traded as low as a tick below 3.60 this morning, March 14.

That is the lowest price since Jan. 12.

It is another story with the December futures, however. There the last cycle got us back to the same high, or higher. We were 4.03-3/4 on Feb. 16, but a tick higher at 4.04 on Feb. 28.

The traders must have more faith in the new crop prices, maybe because they are thinking, before the last big bean price drop, was that acres would be shifted to soybeans.

Still, the low this morning at 3.82 was the lowest since 3.81-1/2  on Jan. 12.

The real difference is in the soybeans. The November futures have rallied back to the same price level three times. We were 10.33-3/4 on Jan. 19, 10.34-1/2 on Feb. 15 and 10.33-1/2 on Feb. 28.

You have to call that a pattern! Of course, there still is the problem that this morning we made a huge low of 9.94-1/2. That is the lowest price since 9.91 on, here is that day again, Jan. 12.

Dipping futures

Meanwhile, May wheat futures dipped back to 4.28-1/2 this morning, the lowest since Jan. 31.

This is a 48-cent drop from the high made in the middle of February. Worse, it maybe violates the uptrend line of higher lows we had been making.

It can be argued that soybeans are dominating the market, because of lack of export news and a crop in South America that seems to be getting bigger. This is new crop again, and it is hard for our prices to fight off the new supply.

Exports

The recent report of 120,000 tons of soybeans exported to an unknown destination was the first since Feb. 14. However, corn exports are the highest of the year. They have been very good for the last six weeks, and are closing the gap in the pace need to meet USDA projections.

The scary thing is that corn exports are so good and corn prices are making new lows.

The May soybean futures have acted more like the old-crop corn. We have seen lower highs, demonstrating a negative mood and a downtrend. The highs were at 10.88-1/4 on Jan. 18, 10.74-1/2 on Feb. 10 .

The ugly low, made this morning, is at 9.98-3/4. That is not only below the huge chartmark of $10, it is the lowest price since Nov. 17.

It is March, and we are back to harvest lows on soybeans!

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