I like to read. No, I have a problem with needing to read. I read the back of the cereal box at the breakfast table. When I moved from my huge house in Ohio to this tiny senior apartment in Alabama, I left behind a couple of thousand books.
Looking for bottom
Somehow this week, I took time away from my addiction to reading one of them to study grain markets. Sure enough, I found two writers who thought the soybean market bottom was in. Sadly, no one so far is convinced the corn bottom is in.
I found an interesting article speculating about what forces could cause corn prices to rise, but it was written with no conviction that it would really happen — you know, an article written for a deadline that is intended to gain notice, but to give no one reason to blame the writer if prices get worse. That is the kind of writing that is a couple of sensible steps above reading tea leaves and chicken entrails.
Now, I have to confess that I know nothing about reading tea leaves, but I understand the chicken entrails are poured out and stirred. The experts actually read commodity charts, and the results seem to make more sense than the chicken parts, but sometimes I am not sure. My mother always laughed at the concept of celestial constellations, saying that you could connect the dots and make anything you wanted. Some days that goes for commodity charts, as well.
Soybeans
The reason that some think the soybean bottom is in is that prices have gained 30 cents since the pre-WASDE report from the U.S. Department of Agriculture March 8. That felt good when we had the May futures high March 14 at $12.17 1/2, nicely above the significant even number of $12.
It did not feel as good when the close was actually at $11.95 1/4, 25 cents lower. It felt worse when the trading March 18 lost more than a dime. In retrospect, this does not feel much like a rally off the bottom.
Soybeans are seen to be sure to rally given the fact that we have such a low carryout projected. We have already imported cheap South American beans into the Southeast. Seasonally, we expect soybeans to rally in March, but there is not much March left. Next, the optimistic writers will be opining about lower acres and inclement weather.
There certainly is already evidence for weather problems. The Midwest is coming out of the winter in the worst dry spell this time of the year in the last 21 years. However, we were dry last year, got just-in-time rains and had record crops in much of the Midwest.
We will see USDA’s Prospective Planting report March 28, and we expect it to tell us that we will cut corn acres and grow more soybeans. That is a definite negative to price that is probably not in the market yet.
Possible predictors
Naomi Blohm, writing in Farm Futures this week, suggests there are three reasons why we can see higher corn prices.
She recognizes that the current estimate of corn left over is 2.1 billion bushels according to USDA, and that is burdensome (my word). She says we need to watch for the weather for the Brazilian safrina (second) crop. She notes that short-covering by the funds can help prices.
They were short 340,000 contracts of corn but have bought back 45,000 contracts already. That is a sign they are betting the worst prices are over, but maybe they are just wrong — my opinion!
Then, we watch the early spring weather. It seems that Punxatawney Phil was right about an early spring (although it is going to be 26 degrees here tonight).
The upper Midwest has broken dormancy, and the tulips are up at Naomi’s house. The fear that the early spring brings with it is that the last time it was this early was in 2012, and we had a bad drought the rest of the year.
It should be said that Chicago wheat futures did take off the last few days, gaining 28 cents between the low of $5.28 May futures March 7 and the high of $5.56 March 12. Sadly, we took some of that back and were trading 14 cents off that high the evening of March 18.
