Market analysts across America are dealing with the dry season. No, it’s not that kind of dry season. It would be nice to have rain to fill up the Midwest soils this winter since we started out thirsty last spring all over the country, except the east, and we worried all spring and much of the summer that rains would not come in a timely fashion.
I am talking about “dry” as in the dearth of news. Love that word — “dearth.” I am starting my 36th year of writing this column, and I am pretty sure that is the first time for that word. Got to keep it fresh!
The truth is, and of course that is all I write here, now is the winter of our discontent. There is not enough news hitting our shores to give us any real feel for the future of grain prices. It is always that way in January and February, but the fallback in corn, soybeans and wheat — all at the same time — has left us hungering for optimistic market news that would give us the secure satisfaction that things will get better.
Surely, we don’t need to sell now at these prices. Sure, I wanted to core the bins or get a chunk of grain moved while I had time and it didn’t impact my tax situation. Now, however, we have no sense of what is the right thing to do. We are uneasy and discontented. Shakespeare’s Richard III uses the phrase “now is the winter of our discontent” to explain all of the reasons for his current unhappiness, but looks forward to his circumstances changing for the better.
A grain farmer can currently look to the recent markets to explain the reasons for his unhappiness, but so far, he has no foresight that portends better markets ahead.
John Steinbeck, in writing a book “The Winter of our Discontent,” presents us with a morality play about a man examining his life and deciding to make decisions that are unusual for him, that he comes to see are tragically wrong.
Nothing about grain marketing should cause the despair of Steinbeck’s character, but it can seem that way. Most farmers suffered through the reality of giving up on the markets a few years ago, selling out cheap in July and then seeing three “black swan” (very unusual, unpredictable and horribly negative) events that caused grain prices to boom in August. It had never happened before. It may never happen again. If it does, we will not anticipate it the next time either.
So the little news we have this week is that prices have continued to decline, the crops in Argentina are a little better than we had assumed, and we have January reports coming out Feb. 8 — precisely the day when you will read this and wish I had earth-shaking advice for you. I don’t.
What I do have is dribs and drabs, followed next week by a report on what happened Feb. 8 and then the two days of trading following. There is no big news until the end of March Planting Intentions Report.
Will the soybeans be cheap enough to inspire a return to more corn acres? Will the corn be so cheap as to inspire the over-planting of soybeans because we risk fewer dollars? Will Jim Harbaugh take his own Michigan quarterback in the draft? That doesn’t have anything to do with grain, but it is interesting. I hated to see Jim leave That Team Up North before we beat him, but at least now I can get ready to root against the Chargers.
Grain prices
In actual grain news this week, prices dribbled lower, following a trend that has been in place for several months. Nothing new to see here. You can tell how excited I am, since I have to talk about Shakespeare, Steinbeck and even Harbaugh. The market Feb. 5 actually saw some corn futures months as much as one and a quarter cents higher at the close.
We have seen a steady decline of corn prices from the high of $5.21 1/2 Oct. 20 to the low of $4.36 1/2 Jan. 30, a loss of 85 cents. Here at 10 p.m. Feb. 5, the overnight is trading March corn futures at $4.43 1/4, up a half-cent.
The market is digesting the news that we exported 155 kMT of corn to Mexico in the last week. That is a third less than the week before, but it is 26% higher than the same week last year. In addition, we have now exported 641.2 million bushels this marketing year, which started Sept. 1. That is 30% better than the pace we were on this time last year. So, good news, bad news, take your choice. The price hasn’t changed much, and there is no new trend.
The World Agricultural Supply and Demand Estimates Report Feb. 8 may provide an excuse for some market correction. Right now, analysts are guessing that the report will lower corn carryout (the amount left in the country Aug. 31) by 12.7 million bushels. This number is inconsequential, but a surprise could rattle the market.
We also have the news that Ukraine is doing a good job getting grain out of Odessa, down the new shipping corridor that vessels are using to skirt the Russian mines and slide on out of the Black Sea. We are told that Ukraine has shipped 14.3 MMT of grain since August. It was 6.3 MMT in January, and that is comparable to what they shipped in a January before the war.
Soybeans finished Feb. 5 from a nickel to almost eight cents lower. We exported 52.4 million bushels in the last week reported, which was up 913,000 bushels from the week before. Unfortunately, it was 28 million less than the same week last year.
We have shipped out 29.12 MT in this marketing year, which is 24% less than the same time last year. Analysts are betting that we increase our critically low carryout by 4.6 mbu to 284.6 mbu. As I mentioned last week, cheaper beans are available in South America, enough so that a cargo has already been loaded for, I assume, Charleston.
Soybeans are trading below the round number of $12 now for the second week. We are currently trading at $11.95 3/4, down a half-cent, and $2.31 1/4 below the high of $14.10 3/4 just back Nov. 15.
