Mixed news and higher grain prices

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combining soybeans
(Farm and Dairy file photo)

No doubt about the big coffee shop topic this week and month: Soybeans have led the markets higher, and soybeans talk is being stirred into the coffee these days.

Soybeans have rallied nearly 80 cents since the second of March, when we put in the recent low prices. The result has been a return to some optimism on farms and some talk of switching acres after the shocking March 31 USDA Prospective Planting report.

All across the Midwest, the phones are finally ringing in elevator offices and buyers are calling customers to tell them targets have been hit. Monday was another enthusiastic bean day, with prices up a dime. The corn was off a nickel, however, after six positive days in a row. This morning, Tuesday, the corn markets have gotten that nickel back, and the beans are up another nickel to new highs.

Today is the day for the World Agricultural Supply and Demand Report from USDA. This comes out at noon, so I have the concern that the morning bump is all we get today unless there are surprises in the report. In fact, we could be lower after trading higher into the report if the news is not really positive.

Pushing the beans

The soybeans have had reason to rally. The end of March acreage report surprised the market with fewer bean acres than anticipated. This came after beans had rallied to new highs, so we continued higher. The news from South America was also positive, as hot, dry weather during the finish of their bean crop has apparently cut yields. The result has been a high this morning of 9.34 1/4 for May soybeans and a high of 9.47 for the November beans.

With the rebound this morning on corn, May futures are now at 3.62 1/2 and the December corn futures are 3.72 1/2. This is in the middle of the recent ranges. Corn futures also moved to new highs before the acreage report, then collapsed after the report of higher than expected acres. May corn futures made a low of 3.47 1/2 the day of the report, down 15 1/2 cents on the day. The December futures actually had some follow-through the next day, so the low there was on April 1, at 3.64.

Sell

In the case of both commodities, these are sales opportunities. We were advised to sell beans when November got above $9, and now we are well above. This is a fairly easy decision. These are not the teen prices we had a couple of years ago, but we are still anticipating a big bean carryout, maybe as high as a half billion bushels.

Or not

In the case of corn, it is a hard decision. Good news has only given us this poor price. However, the huge (pardon me, Donald) corn crop expected to come could give us close to two billion bushels of carryover, and that is limiting the price. Somewhere between here and the recent highs of 3.90 December and 3.74 May is a good hold-your-nose selling price.

Wheat

The wheat had rallied recently, led by weather conditions in the Plains that included a serious freeze scare. The bad freeze did not come, and now warmer weather is overcoming the current worry over dry conditions to make traders think we are improving the crop.

The recent high was made April 4 at 4.86 1/4 July Chicago futures. The low came Monday, at 4.53. We have rebounded, if you can call it that, to 4.57 3/4, mostly helped by the corn and beans.

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