Lackluster grain markets trade weak news

wheat closeup

It is hard to get a change of trend going on the Chicago Board of Trade these days.

Corn and bean prices have been weak. The news of a large Brazilian harvest that is coming off now continues to hang over the market. Corn futures made gains last Tuesday, Feb. 17, then traded lower after getting up toward the overhead resistance.

Wheat futures are limited by ideas of large world stocks and weak U.S. exports. But, here we are on Turnaround Tuesday again, and prices have perked up this morning, Feb. 24.

Every time this happens, we think this is the rally, but so far reality and disappointment have shortly followed.

Last Tuesday, March corn futures were up two and a quarter cents for the day. March soybeans were up 17 1/2. However, the next day corn was down five and three-quarters and the beans were off 12 cents.

In early trading this Tuesday morning, March corn futures are up one and a half, after being down six and a half cents Monday. The March soybeans are up nine and a half cents after being unchanged Monday.

So, trading is encouraging today, but only if we can get some follow-through tomorrow.

March futures

Looking at the March corn futures, we see that we keep trading to a level around 3.90, then backing off below 3.80. Our recent low was on the 30th of January, at 3.65 3/4. Since then, we have had 11 days of prices near 3.90. On the ninth we actually hit 3.91 3/4.

However we are currently, on Tuesday morning, at 3.80 1/4, up one and a quarter.

This makes us think that we need some news to get us over the top of this trading range market.

Planting intentions

The next real news does not come until the March 31 USDA Planting Intentions Report. Currently we think that the acres will be several million below the planting of last year.

Now comes the guessing. If we get that report, will prices improve, or are the acres already “in the market?”

In the meantime, basis is being supported by the fact that farmer selling is slow at these price levels. What a shock! Farmers do not want to sell $3.50 corn after selling $8.00 corn a couple of years ago!

Soybeans steady

The soybeans have not been as negative, which is actually a surprise given the anticipated South American crop. The report this week is that Brazil is staying dry, which helps the harvest although it may be hurting the final yield.

Our prices are being supported, however, by crop estimates a little higher than some of the low estimates of a couple of weeks ago. Also, the truck strike there is planned to disrupt movement of beans to export points.

The March beans put in the recent high at 10.91 1/2 on Jan. 12, which was a report day. After the high, the report came out and beans finished down 36 1/2 cents at 10.16, which was 45 cents off the high of the day.

We put in a low of 9.55 on Jan. 30, then recovered to a high of 10.17 on the 19th. We are currently 10.08 3/4, which is up nine and a half for the day.

Wheat bounces

Wheat futures have bounced off the low of 4.92 1/4 on Feb. 2. We had seen a long decline of almost 1.31 since the spike high of 6.77 the middle of December.

We bounced off the recent low to 5.46 on the 17th, but are currently at 5.07 1/2, up for the day almost two cents.

The wheat has been limited by the idea that we have good snow cover in the Plains, protecting the big hard wheat crop.

Then, also, we see large world stocks, which make us feel there is little upside potential. The market has made some swings on the problems in Ukraine. On a given day we worry that the war will disrupt exports, so we go higher with the price. Then we see reports that the export pace is being maintained, and we go lower again.

Uncertainty is normally a cause for higher prices. Buy the rumor, sell the fact.

Winter’s bliss

Here in the frozen environs of Ashtabula County we have been enjoying winter on some days and enduring it on other days. The weather should not surprise us. This is winter, and it is harder than last year.

I got the mail one night last week when it was minus 24 degrees, and the temperature was minus 29 when I got up. I will remember that for a while.

However, I remember a year in the ’70s when the high for 15 days was below zero.

The global warming crowd has become the climate change crowd. They are enjoying the fact that the East has frozen up while the West is record warm with limited snow cover in the mountains.

I am enjoying the fact that my commute is 40 feet, and winter is wonderful from my window, even if one car is still frozen in.


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Marlin Clark is an associate of Russell Consulting Group, with a local office in Williamsfield, Ohio. Comments are welcome at 440-363-1803.



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