Grain prices worked higher over the last two weeks, then moderated as they waited for some news that would encourage bullish behavior.
Today (Feb. 9) we will get the USDA Supply and Demand Report, but it remains to be seen if that will be news that helps. Wheat actually leads the news right now, on the strength of a new life-of-contract low on March Chicago futures.
Going into Tuesday, we hit $4.57 1/2, which is 31 cents below the recent high of $4.88 1/2, on Jan. 26. The easy thing to say about the wheat is that it is trading in cycles, and each low and high are lower than the previous one.
For perspective, the high of the last cycle was $4.99 on Dec. 18. We have not had any news that will break us out of this trading pattern. The attention here in wheat is always at this time of year the development of the new crop.
The July contract is also locked in a descending cycle pattern, although the last dip, yesterday, was a particularly ugly one. We lost seven and a half cents, closing at $4.68 1/4, just a penny above the new contract low.
Against wheat
All the fundamentals seem to be against wheat just now. There is poor demand, abundant world supplies, no real weather problems, and good U.S. growing conditions.
Any big bump in prices would come as a result of production problems. Normally that would be kicked off by winter problems somewhere, but it is not happening.
The corn markets have been off for four days now. We made a recent high of $3.7 3/4 on the second, but have slipped to a current $3.60 1/2. This nipped a little corn selling in the bud, as farmers who were waiting for $4, but were willing to do a little give-up selling below that have now lost interest.
This seems to be just a little matter of lack of interest in a market that needs news. Maybe it is a market that is lower regardless of news.
Exports came in at 444.5 mbu, almost double the 24.1 rate needed to fulfill the USDA projections for the year. Of course, we were short of exports last week.
Still, we are fighting negative outside markets. The crude is back below $30, The Dow is slumping, and the dollar is up. Add to that the uncertainty of Chinese imports due to their economic problems.
According to the Commitment of Traders report out Feb. 5, the spec. funds have cut the number of short contracts by 23,400 this month. That this has not helped prices is a real negative.
Have to wonder
It makes one wonder what the market would be without this help. Soybeans also took a big dip this week, but not to a new low.
Here, we had been in a wide sideways movement. That is, the trading had been in a 25 cent range, but mostly with little loss. Now we put in four down days, with the Friday and Monday being particularly ugly.
The recent high was $8.89 1/2 on the second. Now we are at $8.62, down a half for this Tuesday so far, and just a half above the low of $8.61 1/2 put in Monday. So, we lose nearly 30 cents just when a 30-cent bump would have made a lot of excitement.
Hard to decide
Conclusions and directions are hard to wrest out of this market. Suffice it to say that we continue to hope there is a surprise at noon in the USDA report, or that any other news spooks the market higher. We still must have the perspective that the nation produced a big crop even if locally we didn’t.
Picking the tops is ugly when the tops are too low.
