Grain markets on the Chicago Board of Trade remained strong last week, but soybeans lost ground Jan. 24. March corn futures gained 20 cents for the week, and made a new high Jan. 24 at $6.211⁄2. This was slightly higher than the high of a few days ago, and a good positive sign of bullish enthusiasm.
Soybeans, meanwhile, gained 441⁄2 cents on the March contract last week, and 321⁄4 cents on the November contract. In the process, we made a new March futures high Jan. 20 at $14.291⁄2 and a new November futures high at $13.25 the same day.
Divergence came Jan. 24, when nearby corn futures gained almost a nickel and December futures gained two and one quarter cents. Soybeans, however, went the other way, with March futures closing down 111⁄4 cents and November futures off 83⁄4 cents.
Corn futures have continued to be supported by cash fundamental. Currently, focus is on good exports and a strong ethanol grind, although the ethanol margins have declined.
Encouraging export news includes the fact that there have been regular shipments to China on the contracts already made. Some have speculated that the contracts might not be fully completed, but indications are that the Chinese will fulfill them.
There is some speculation that current high internal Chinese prices will support additional sales and an increase in the U.S. Department of Agriculture estimate of exports.
Soybeans have been supported by the weather problems in Brazil and Argentina that were seen to hurt the current soybean crops. In fact, encouraging rains were experienced over the last week, but the market is convinced that the soybean crops as a whole will suffer net losses for the year.
The little hitch Jan. 24 may be just some profit taking, or it may be a reaction to current forecasts for more rain, or we may look back and say that was our last great chance to sell. Certainly, the prices the last few days have been catch-up opportunities for any producers not heavily sold on the 2022 crop.
Even as we have been carefully watching the corn and soybean markets, the wheat markets had gone through a three-week slide that was looking more like a trend change and less like a correction. This week, we finally saw a rally firm the markets up.
Chicago futures were up 38 cents. This kind of rebound after big losses can just represent some profit taking from the bearish side, so it can indicate a return to some fundamental.
The biggest fundamental talked about this week was the dry conditions in the Southern Plains. We are told the area is dry enough that damage has been done, but there is some squeamishness when it comes to putting money behind the drought.
It is an old axiom that the winter wheat crop is killed several times every winter, whether from lack of snow cover in cold weather or drought. In fact, a good rain right now would have traders talking about good crops again.
Time to sell?
The wheat marketing reactive plan is similar to the corn and soybean marketing. For those who have been reluctant to sell this early, this is the big second chance to talk yourself into it.
For those who want to see the crops well along, it is still January. This should be seen as a good catch-up opportunity if your habits and experience allow you to sell the crop before you plant it.
I am in the “sell the crop” group, but not necessarily with the wheat. In Northeastern Ohio, it is so easy to get quality problems with excessive rains in early summer that promote disease problems. This is a problem one year in three — that means there is more risk than I like, and it is impossible to tell which of the three years this is!
I talk to farmers regularly who never sell until the crop is in the bin, and if they do this every year, it is a plan hard to argue against.
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