Marketing the ocean waves

ocean tide

Sit by the seashore and you are forced to watch the wave action on the shore. A wave rolls in, splashes within a few inches of your feet, then rolls out. Every once in a while a big wave comes farther, and forces you to scramble to avoid the water. If you are watching the shore of Lake Erie, the wave action seems to remain the same. If you watch an ocean shore long enough, you will discern a tide, which causes the high and low water marks to change twice a day.

Sit by a quote screen the last month and the corn chart for the Chicago Board of Trade seems to perform this same wave action. The price level goes up, it goes down as if it were wave action on Lake Michigan, near the board building.

Corn futures

The March corn contract, which we are now using to base our cash bids on across the nation and world, has performed a wave action that has led to little gain in the eyes of the farmers I talk to. In fact, we have gained a little, but it has not been action that has caused farmers to jump on their pricing surf boards. There seems to be no exciting surf action to see.

March corn futures put in a recent low of 3.64 1/4 in the middle of November. Since then the price has gone up and down daily in small waves, with a little excitement only on Dec. 4 and 7,  when we got to 3.82. After that, the waves got wilder, but still swung in the same pattern. This morning, Dec. 15, we are trading at 3.76 1/2, and are down two and a half cents for the day so far.

The plain truth is that there is no storm on the horizon that has us thinking about putting our grain bins up on stilts. The next real fundamental news is coming in the form of the so-called Inventory Reports from USDA on Jan. 12. Those are the final Crop Production and World Supply and Demand Reports.

In the meantime, we are trading the news that Argentine grain export taxes for corn and wheat are being eliminated, and the tax on soybeans is slipping from 35 percent to 30 percent. This is an attempt by the new president there to help exports, and it is seen to hurt our exports.

However, the market was actually up Monday, so this seems to be in the market. Maybe this is a reason we have had to leave the surfboards in the woody (or the pickup, maybe).

Oil prices

Our markets are also trading the news of the dollar getting stronger, but the crude oil prices weakening. The crude prices are both good and bad for us. In overnight trading Monday morning, crude oil traded under $35 a barrel. We are getting down to the neighborhood of one-third the price we had in recent times.

This price helps control the prices of nearly everything we buy on the farm, but it maybe hurts our economy in general. Industry gains the cheaper costs of production that cheap oil brings, but the heavy equipment industry sees decreased demand for oil field equipment, which is being stacked out and auctioned. The shale boom is over until oil goes back over $70 or so. The cheap natural gas has stopped drilling in northeast Ohio. No one can drill oil wells in the shale of North Dakota at these prices.

Soybean cycle

Soybean prices have had a strong cycle instead of the wave action of corn. We saw a January contract low on the 23rd at 8.44 1/4, then a high of 9.09 3/4 on Dec. 7. The same day the price sunk like the Arizona to a low of 8.81 1/4, then settled on the bottom (we hope) over the next five sessions. We traded 8.71 1/2 this early Tuesday, down two and three quarters of a cent.

Wheat futures in Chicago have taken the worst beating recently. We traded 4.88 1/4 March futures this morning, down five and a quarter. The recent high was 5.32 3/4 on the fourth. The recent low was 4.65 1/2 on Dec. 2nd. That is a drop of over 67 cents, and there seems to be little support.


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