Marlin: Wheat leads markets lower, for now


If you don’t like the prices, stick around for a couple of days. Anything can happen and does.

As I write this the morning of March 29, wheat prices were leading the markets sharply lower. July wheat futures were down over 75 cents, and that crash is taking corn and soybeans prices along for the trip.

Overnight, the talk was that Russia was expected to withdraw its military a little, so the grain traders are overreacting to the downside.

Now, this rumor may have some basis in fact, but fact will not be that the war in Ukraine is over. But, when you add that news to news of improving weather in our Southern Plains, you have a wheat market that is more than a little defensive.

Fueled by the unknown

We have discussed the impact of this huge wheat production area on world supplies. The emotional reaction to the war is the idea that there will be no wheat that survives the tank traffic or no wheat that reaches Black Sea ports or no ships that are willing to enter the ports to load out the wheat.

All of those things are exaggerations, of course, but the real bushel impact of any of them is unknown, and it is unknowns that fuel the futures markets.

The futures markets are, by definition, the best guess of traders of prices for certain commodities in the future, and the future is unknown.

All three major commodities had a good run last week. July corn futures, which are what cash traders are basing prices off now, were up 221⁄4 cents last week, with December up 231⁄2. Those were not new highs, but the December futures had the highest weekly close yet.

July soybean futures finished the week up almost 43 cents, with the November soybeans up 30. July Chicago wheat futures were up 47 cents for the week, although the good weather in the south left Kansas City futures down 45 cents at the same time.


So, it was a disappointment to see July corn off 22 cents at $7.081⁄2, March 29, after a high of $7.47 just back on March 7. Likewise, December corn futures were at $6.501⁄4, down 141⁄4, after trading as high as $6.801⁄2, March 23.

July soybeans were down 18 cents at $16.283⁄4 after a high of $17.41 late in February. The November futures were down $181⁄4 at $14.501⁄2 after a Feb. 24 high of $15.55.

It is notable that a range of over a dollar in soybeans is a ho-hummer after the $1.721⁄4 range we saw in July soybean futures over Feb. 25.

Then there is wheat, where we had almost a three-dollar range between the morning of March 29 and the $12.781⁄4 high, March 8. Three weeks, three dollars. Wheat traders will remember this for a long time.

For them, it is the reason for the new house, or bankruptcy or a growing bald patch. Maybe all three, just in March!

The known

It is impossible in these times to predict what will happen to prices, but some things are known.

First, these are selling opportunities. There are huge profits to be had, even with the ridiculous input prices we are seeing and even though we are off the highs.

Second, we need to note that we did not really make new highs recently. We have just confirmed the highs on the days we had positive, for prices, news.

Third, the excitement continues to be in nearby markets enough to keep futures prices inverted. That is, the nearby months are worth more than the deferreds.

For example, the May corn futures are 80 cents more than the December. In the soybeans, the November contract is almost $2 less than the May.

This market inversion makes it tempting to not sell the new crop soybeans. Indeed, maybe bad news will continue, and as the calendar flips, the deferred prices get higher. We have no way of telling.

In soybeans, for example, we have reason to believe the balance sheet of supply and demand will just keep getting tighter.

One indication of the tightness will come by the time this is in print. The long-awaited March 31 planting intentions report and March 1 grain stocks report, released March 31, will give us input on that balance.

Right now, the average trade guess for planted acres is 92 million corn and 88.73 million soybeans.

Arguably, this is not enough soybean acres to prevent higher prices, but the corn acres may already be locked in by input purchases and reluctance by farmers to switch acres as much as analysts, looking only at dollars, think they should.

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