It was a struggle to follow the conference call the morning of Dec. 19. I get to participate in a market analysis led by the lead market advisor of the biggest co-op in America. Usually, I am fascinated, but not so much this week.
The fact is, I turned it off early because it did not hold my interest. There is just so little going on between Thanksgiving and Christmas, and barely any more in the week before the start of the New Year.
The reasons are self-fulfilling: Traders take time off; fund managers take no new positions because they don’t want to have to watch them, and because they already have their bonuses locked in and don’t want to risk anything. Farmers don’t sell cash crops, requiring elevator and processors to sell futures because, if they were going to do it before the end of the year, they already did it. They have holiday plans, too. Farmers who don’t want to pay taxes on sales this year are waiting for the next year to market.
News about nothing
Thinking about this makes me think it is the “Seinfeld” market. It is a market about nothing, just the way the “Seinfeld” folks said their show was about nothing. Each week the “Seinfeld” people came up with some minor remark or attitude or incident and blew it up into a half-hour show. It was funny, but it was about nothing.
The grain futures markets are not so funny because they are about real money. But, they are about nothing for a month or so.
Sure, stuff does happen, like corn prices recovered last week a little because bombing in Ukraine was affecting export elevators’ ability to maintain condition of grain and load it out. Argentina got a little rain and caught up planting the corn crop, which normally represents 40% of production for the year.
The safrina, or second crop, planted after soybeans, is actually the big one. Items like these get more attention than normal by writers who have to fill pages with something because there is so little real news. In reality, however, it is market news about nothing. In the trade it is referred to as “noise.”
A little noise
Since, like other writers, I have to write about the noise, here is a little. Corn futures had the lowest trading volume of the year last week. Exports were better than expected. We shipped 37.7 million bushels, which was the third largest week of the marketing year, which started Sept. 1.
Ethanol production was down, getting close to a million barrels for the week. Production was a little better than expected, at 1.06 million instead of the 1.025 expected. Ethanol production is down as gasoline demand is down, as the economy is starting to unwind.
Even with these negative news snippets, corn futures were up nine cents for the week, to $6.53 March futures. That was just noise, I guess, as our markets Dec. 19 lost six and three quarters cents, and in the wee hours of Dec. 20, we have recovered just one and three quarters cents.
Argentina also caught up its soybean planting. They don’t plant when it is too dry. The soybeans, like the corn, had a big export week. We shipped the second highest weekly volume of the marketing year.
It should be noted that a lot of the big export can be attributed to a catch up by the Mississippi River system, which is now running normal water levels. A major amount of the shipments were to China, which is actually ahead of last year’s pace.
For the week, however, January soybean futures fell three and three quarters of a cent to $14.80. Then, we lost over 19 cents, Dec. 19, and were back up 8 cents in the wee hours of Dec. 20 as this was being written.
Wheat news is mixed. Western Australia is reporting a record wheat crop, while Argentina’s is now estimated at 12.4 MMT instead of the 22.4 MMT of last year. The Indian crop, as we have discussed, went from expected large exports to the possibility of small imports after the Indians finished the crop in a drought.
Add in the dry conditions this fall in the Great Plains, and the World Supply may be short for the marketing year.
