Outside markets are trading markets that affect farm prices of commodities, but not directly. This includes things like petroleum prices and the value of the dollar versus foreign currencies.
The outside markets have been weak with the fears generated by the omicron variant of COVID, and with political fallout from saber rattling by the Russians in eastern Ukraine. These fears have been in the market for a few weeks now, and the market is starting to shrug them off. The COVID fear is appearing to possibly be overblown, but the saber rattling is another deal.
Russian conflict
Russia has 100,000 troops on the border of Ukraine now and is reported to be moving in another 75,000. They are now expected to invade in January; I suppose to move heavy equipment when the ground is frozen.
The best the Ukrainians can hope for is a mild winter and more resolve than is likely in the world community to oppose the Russians with sanctions. The best sanctions would involve Russian oil and gas.
At one point last week, the corn market was down 30 cents, and there was no good inherent reason. It was just a reaction to world news. We eventually rallied to close eight cents off for the week, so maybe we can get back to trading supply and demand.
The uptrend was notable, with successive December futures lows since October at $5.063⁄4, $5.473⁄4, and $5.62 just back on the last day of November. Since then, we have put in a high of $5.883⁄4, Dec. 3. Count it up: That is a gain of 82 cents in less than two months.
The positive for the corn market has been notable exports to our neighbors, both of whom are having drought problems and want to be aggressive about buying before prices potentially get higher. Of course, that aggression is what is fueling the rally, so the market is self-fulfilling.
Also pushing prices is a very profitable ethanol industry that wants to grind as much as possible and build inventories back up. Remember, high gasoline prices means high corn prices.
Soybeans
The soybeans are a different issue, and this week was the other side of a market that has seen soybeans in a downtrend and corn working higher.
This week, while the corn was struggling to recover from a 30-cent break, the beans were 14 cents higher. Again, there was not much in the actual grain market to tell us why. As we grasp for reasons, we just come up with the idea that corn and soybeans can only trade in different directions for so long.
Until this week, the corn was gaining on the soybeans. This week reversed that.
We are coming into a time when the focus is on South American production. By February, we will start to see some soybean harvest. If the South American corn and soybean production is higher than expected, that production will sharply impact the world markets of corn and soybeans, and impact American prices.
Wheat
World wheat markets continued the recent trend of lower prices. For now, the market has stopped worrying about the supply of spring wheat in our Northern Plains and started worrying more about world supplies.
Russia, for example, has been continuing to ratchet up export duties to limit the amount of wheat leaving the country. One wonders if this has to do with just the shortness of the crop there, or if they know they will disrupt Ukrainian movement soon.
Meanwhile, Australia has wheat coming, but the rains that helped the crop to good yields have continued until they have ruined the quality of the wheat. All over the world is the same story.
Wheat is a dry-land crop and does not stand having wet heads and wet feet as it gets close to finishing. The late wet weather always results in lower protein, lower test weight and disease issues.
God invented wheat to grow in dry areas of the Fertile Crescent of the Middle East. Australia usually has similar dry weather. The U.S. Great Plains normally is wetter, but not excessively.
The Eastern Corn Belt struggles with late rain one year in three. That is the biggest reason to limit forward contracting of our Soft Red Winter Wheat.
