OK, I admit I have an addiction problem when it comes to news. If I had an honest New Year’s resolution, it would be for me to lay off network news.
I don’t want to be ignorant, like a neighbor I had once who didn’t realize we had two political parties in this country, but at my advanced age, I have had to admit that I should not get worked up about something I cannot affect.
I heard of a man whose friend asked him how he and his wife got along so well. He answered that it was because of a division of labor. She decided the minor things, like do we need a new roof? Should we trade in the car? He decided the major things, like, how do we get out of Afghanistan?
What no one can actually decide is what weather we should have this week. There is general agreement that the worst storm in the country since the last one is progressing east. The odd thing about this one is that it is going straight east, and there is no snow forecast for most of the counties just south of Lake Erie. The exception to that is, of course, Ashtabula County, Ohio, where I survived for many decades.
Snow belt
Look carefully at the forecast maps, and you will see snow coming to Ashtabula County, the northeast corner of the state, as much as 18 inches depending upon the forecast. As usual, the arctic winds will blow across an open Lake Erie, be forced up 500 feet of elevation in 28 miles and dump snow on Cherry Valley.
If you live there, like I did for a long time, you can wake up any winter morning to 2 feet of fresh snow, depending upon the prevailing wind. If it comes out of the north, it dumps on Chardon. If it blows east, it dumps on Orchard Park and Springville, New York. People talk about Buffalo, but the real snow belt is south of Buffalo.
Significant to our discussion of grain, which I will eventually get around to, is that this nationwide storm will bring some snow cover to the Great Plains to offset the freezing weather that comes with it. The freezing weather that matters there is the zero-degree temperatures that sometimes come without snow. Snow and 25 degrees are not going to reverse the fact that all three wheat markets (SRW, HRW, HRS) are back down to life-of-contract lows.
South America
Most people in the world are more interested in the weather in Argentina right now. Today, I saw a picture of a cornfield there that reminded me of June 1, 1988 here. Some enterprising photographer drove 500 miles and emailed in a picture of the worst corn field he found. The one I saw would indicate zero yield of twisted up, droughty corn, and I bet it is not that bad.
As Pappy would say, “Nothing is ever any worse than a farmer on the scene says it is.”
It is, however, bad there, and grain markets all over the world are noting it. That picture, and the talk that surrounds Argentina right now, may be one reason the futures markets reversed a horrible day Jan. 3 and put on a rally. We had a sell-off in corn and soybeans Jan. 3 that caused the wheat to fall in sympathy.
In the aftermath, March corn futures closed down 8 1/2 cents, and March soybeans fell 20 1/4. As this was being written Jan. 6, March corn futures have closed the day session up 8 3/4, and the March soybeans recovered 6 cents.
Even the bottom-hunting March Chicago wheat futures came back almost 11 cents today, but that might not mean much. The corn bounce had a lot to do with that picture of twisted up Argentine corn, but that may already “be in the market.”
Varying views
It is interesting the viewpoints one can read the last few days. Since corn just made a 6-month high (although any corn price that starts with a “4” cannot be considered high to anyone but a chart watching technical trader) the comments were strong Jan. 3 that we had hit the resistance and the move was over.
We have a pretty chart, that we can easily use a ruler to extend, that predicts a breakout, but that chart got scribbled on with the losses Jan. 3. Now we have Jan. 6 in the books, and maybe the uptrend is still there with today’s gains.
Soybeans
Soybean watchers are not nearly so happy. There, we have maybe four cycles lower, depending upon the points you pick to draw your lines.
We have a positive bump the last few sessions. In those cycles, we have gone from $11 1/4 on Sept. 30 to $9.52 on Dec. 18. When I draw my lines, I throw that out (because I have little technical discipline, so I call it an “outlier.”) With it thrown out, I show support around $9.85 March futures, a point we have gotten near four times.
We have to call corn in an uptrend, soybeans in a downtrend. It is interesting that, with corn at a six-month high and soybeans in a downtrend, some writers you can follow on Google today are talking about the good possibility of gaining acres of corn this coming spring.
It is really difficult to think of selling corn at these levels, especially with high production costs. Trying to make money with sub-$10 beans is no joy either, however.
The end of March Planting Projections from the U.S. Department of Agriculture may be really interesting this year. One sure thing is that corn prices will back off right after acreage projections show more corn. So, the next three months will be a gut check for those who like to forward contract some of the crop before it is planted.
Speaking of Google, they used my column for the second time today, pulling it for the national phone news feeds. At this rate, I just may become a household name before they plant me.
