Good news in the grain markets is hard to find right now. Corn and soybean prices on the Chicago Board of Trade are bouncing along on long-term support lines. The Chicago wheat has made a new contract low after working a buck lower since last summer.
Maybe the only good news is that the corn and beans have not fallen through support and may bounce higher. Soybeans started this Tuesday, March 1, a nickel higher. That has to be good, right? The corn futures are only fractionally higher, however, and the wheat is off a penny.
The trends
Let’s look at the news we are working from. U.S. crude oil production was down a half a percent in December. This comes as rigs are parked in the shale patch, since the cheap crude will not support scale production. Lower production is bad for the economy, and also hints of higher costs for farmers.
Then there is the soybean production reports from South America. Remember that we originally were told that the yields would be poor, but the crop would be a record with increased acres. Now each week brings the forecast of better yields and a bigger record crop. This week one respected expert increased his numbers by one MMT in Brazil, to 100 MMT, and raised the Argentine guess one MMT to 60 MMT.
The Brazilian harvest is now ahead of schedule, regardless of some rain delays. We are told they are 33 percent harvested, ahead of the normal 29.
Exports are lagging
The weekly corn export was at 737.6 MT, down from the 908.8 of last week. Soybeans were shipped to the tune of 1.048MMT, but we did 1.548MMT last week. The good news there is that we are still on pace to meet USDA soybean export projections.
Bothersome about the exports is the idea that exports lag as prices go down. This is a trend that suggests the importers figure they can get cheaper grain later. This is not what we are hoping for, but they have been wrong before. If prices turn around, the exports will increase as they try to catch up.
Good news in the ethanol markets is that we set an annual record for production at 14.81 million gallons. Bad news is that ethanol value is directly related to gasoline value, and that is cheap, although it has been higher lately.
Wheat crop conditions in the Plains are improving, and wheat prices are making new lows in response. The Kansas crop is now 59 percent good and excellent, up four percent this week.
Beginning to grow
It should be noted that Kansas is seeing wheat break dormancy, and this is early. It was just yesterday that I pointed out to Squeeze that the maple tree outside our bedroom window was budding. The maple sugar guys may have the crop cut short. Spring is springing.
The worst piece of news this week still has to be that the U.S. Department of Agriculture says we will carryout almost 2 billion bushels of corn at the end of the marketing year. This is twice the desirable number, and portends cheap prices. Nobody gets excited about the supply of corn with this size pile in reserve.
Looking at the prices, we have May corn futures up three quarters of a cent now on this March 1 morning, at $3.57-3/4. We have been lower for five days before this, and are not much below the recent contract low of 3.54-1/4 made on Jan. 7.
Looking ahead
The May soybean futures are trying to bounce off the support line made by connecting the last three lows. They are $8.60 Monday, $8.56 on Jan 6, and $8.59-3/4 on Dec. 17 (my dad’s birthday!). We were even lower than that in late November, at $8.53-1/2. The good news is that we are up over five cents this morning, so that support may hold. If it hold in beans, it will likely hold in the corn.
The wheat support may be another thing. We had a new Chicago May low, at $4.46-1/2 on the 24th. We are currently $4.52-1/4, but that is down one cent.
