New grain futures highs followed by a correction

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Brazil soybean plantation

My mother’s older sister was my Aunt Eunice. She was my favorite relative on my mother’s side, probably because she was a lot like my grandfather. He was brought up in a farm family and spent his life raising truck crops behind his house in the middle of the city of Bedford. He rented a small farm outside of town from his brother to raise small grains. His regular income came from being the head of the Cuyahoga County CCC office.

I never knew how much farming was in my aunt’s genes until the day I took her to visit a hog barn. She stuck her fingers into the crate of some 15-pound pigs and let one suck on them. I will never forget the transfixed expression on her face, and I realized that day that she should have married a farmer instead of sacrificing her years to a single life of caring for her elderly parents and teaching school.

Weather worries

I thought of her fondly when I read tonight that the Farmers’ Almanac was predicting lingering winter weather in the spring this year across the Midwest. Aunt Eunice always bought me a copy of the Farmers’ Almanac as a small Christmas present. I confess that I never paid much attention to its weather predictions, since even the five-day forecast was not that accurate in northeast Ohio. I was raised to understand the truth of the statement that, “If you don’t like the weather, stick around a little while!”

Bad weather and declining prices are being given as the reasons that Russian farmers are planning to plant fewer acres of wheat, which could eventually threaten the Russian standing as the world’s leading exporter of wheat. Year 2022 was the record year for Russian production. They harvested over 104 million tons of wheat that year, but by 2024, they were down to a production of 85 MMT. Now they are talking up the raising of peas, lentils and sunflowers instead of wheat.

Bad weather has been a problem in South America and Australia this year. Now, I am reading that the recent unprecedented snowstorm across the southern U.S. has done some damage to the wheat crop in the Southern Plains. In southern Alabama, the beaches of the Gulf Coast had 8 to 12 inches of snow in areas that had never before had any snow.

It is not known the extent of the damage to our wheat crop from this storm, and the market has not reacted yet. Wheat has been in a significant downturn most of the time since the summer months, and it will take more than one storm to really stir up prices. March Chicago wheat futures are currently trading at $5.36, just a dime up from the $5.26 low of Jan. 10. We have had nine cycles lower and then one a little higher. In October, we saw $6.39.

Futures

The corn futures have continued the bullish move that was sparked by the yield reductions in the U.S. Department of Agriculture January reports. The high came after a gain of 90 1/2 cents since the $4.14 low Oct. 17. We have slacked off the last few days and were trading the evening of Jan. 27 at $4.86 after a high of $4.94 1/2. That may be the high for this season, as there is a lot of resistance to breaking $5.

The corn and soybean break came Jan. 24, with the March corn futures losing 4 cents and March soybean futures losing 9 3/4 cents. The soybeans followed through Jan. 27 with a 10 3/4 cent loss.

Commentators blamed the corn losses on “profit taking and technical selling.” That is the usual reason given for a move when there is not better fundamental reason.

The soybean loss made sense, since Argentina, the world’s biggest soymeal exporter, temporarily cut the export taxes on farm products. I am not sure how the mechanics of this work, but the intention of the government is to inspire farmer selling in the near term. Farmers tend to store for late sales in countries with high inflation.

Farm Futures online commented that “soybean prices remain sensitive to South American production potential.” We keep seeing reports of weather problems in Brazil and Argentina, but the truth is that the Brazilians are still on target to have a record 6.2 billion-bushel soybean crop. Market writers talk about a shortage of rain, but in some seasons, the Brazilians normally have an excess of rain. This is like commenting that Ashtabula County is having a shortage of rain in May. The person reading may think this has negative implications for crops, but the farmers there are grateful for less rain that allows planting.

Both corn and soybeans were exported in the last reported week at a rate at the high end of estimates, a good thing. Wheat exports were at the low end of estimates, and that is a bad thing. We keep looking for something to stop the wheat price slide, which has gone on most of the time for months.

So far, not even freeze damage from last week’s storm across the southern U.S. was enough to overcome the negatives in this market.

Analysts are still quick to write about fears that President Trump’s tariff threats will hurt ag exports. The only definite Trump news that I noticed this week, however, was that he is wanting to see E-15 sold year-round. That would be good news for farmers, who would see a lot of E-10 pumps converted.

Oh, yeah! Aunt Eunice did not quite make it to the 21st century. I have not read a Farmers’ Almanac since she passed.

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