Market Monitor

By Marlin Clark

The silly season is upon us

In NASCAR the so-called "silly Season" is that period at the end of the year when teams are realigning. Drivers are going to other teams, teams are changing leadership or swapping drivers. People are hired, fired. Everyone knows this next year is the year. Just ask the Cubs or, for that matter, the Indians.

In the grain markets the silly season tends to come in last half of December. Traders take time off before or after Christmas and New Year's holidays. Commercial hedging can be heavy just before or just after the first of the year, depending upon the bent of the farmer who may need to sell or to hold grain for tax purposes. The heavy or light hedging may distort the market direction. Trading gets a little weird just because everybody may not be on the floor, and the market does not have the same liquidity.

Or, maybe I am just looking for a reason or a lack of reason for recent market activity. Prices were sharply higher Monday on the Chicago Board of Trade, after the Christmas break. March corn futures closed up seven and a half cents at 4.16. They actually hit this price and went through it right after the open, then traded lower than that most of the day before a strong close.

January soybeans on the Board finished up nearly 30 cents, but were just barely positive in the middle of the session. March Chicago wheat futures were up over 26 cents, but only up 6 cents for the middle of the day.

Most interesting is not the Monday trading, but the last few days. All three grains have made significant gains in the silly season, and we are now hoping that we don't give them back away when the boys all come back to town.

March corn futures had a December 18^th low of 3.91, then made the high Monday at 4.18-3/4. That is almost a 28-cent gain. January beans have gone from 9.84-1/2 on the 22^nd to 10.34 on Monday, up 50 cents. March wheat has gained 35 cents since the 17^th. That doesn't seem so silly, if we can hold on.

So, we ended Monday poised for a big Tuesday, right? Wrong, corn bread breath! Corn futures on the overnight going into the Tuesday session are unchanged, the beans are down six and a half cents, and the wheat is off a nickel. With Christmas on a Friday, we are trading more like a three- or four-day weekend.

Anything can happen today, and the rest of the week. Nothing means anything until after the first of the year. Well unless you are one of the farmers who sold me corn with the price up 8 cents yesterday. Then, it means something.

And, that is where we are—staking out lines in the sand, saying, maybe I can sell something here. Maybe I should worry that prices get cheaper. Maybe I should listen to the talk that South America is going to plant more beans than ever before. They should, based on the dollar price of soybeans, so where is the surprise? Maybe, heaven forbid, the dollar price of soybeans is not so important anymore, like the Arab countries that want to trade oil in Euros.

Our currency has gotten so cheap that we are starting to forget that the Euro started out as the European dollar. It was the new currency of the new EEC, formerly the Common Market. It started out at par with our dollar, but now it is worth so very much more.

Maybe we have forgotten when we could just trade grain and not worry about things like the value of the dollar.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Uncertain markets lead us out of harvest    

Sometimes I forget what business I am in. Yesterday a customer who buys corn in Central PA made a remark that is significant. He said that crude oil was going lower, so he supposed the grains would all be slipping off until that stabilized.

Time was when a grain commodities dealer did not have to be an expert, or at least conversant, with all other commodities, precious metals, and the value of the dollar. That time is gone. Now the markets are interconnected in odd ways and on a given day the price change in Chicago is not because of anything in the grains.

Historically wheat, then soybeans reacted strongly to some outside markets. Commodity traders who are dealing in gold and other metals may view soybeans as just another valuable commodity. If gold goes up, maybe soybeans are worth more. Or, in our current market, maybe gold is going up just because the value of the dollar against other currencies is going down. This makes the gold higher priced in dollars, but not necessarily more valuable. All those adds about buying gold because the price is going up are really about shorting the dollar.

On the other hand, corn prices now are strongly and directly related to crude prices. With a significant portion of the entire crop going to ethanol production, the price of crude oil, then its gasoline derivative, makes corn prices go up and down. If gasoline declines, it makes the ethanol portion of it worth less. That tends to lower the bid for corn at ethanol plants. If the ethanol plants, for competitive reasons, can't lower prices, they lose money and down the road may close. That lowers demand for corn and brings lower prices later.

All that to say this: prices are bouncing around, and it is hard, from purely a grain perspective, to say why. The only real fundamental news coming is the USDA January Inventory Report in early January. I have been talking about that, and it is finally not all that far away. After this delayed harvest, we will finally get to find out what the crop sizes really are, as measured in bin space. The hope would be that the crop is smaller, due to harvest losses. The reality is, that except for the heavy winds of last week, there has been little to hurt the standing corn. And, the last of the fields are often the best.

The trend of a big crop is to get bigger. Part of that is the USDA methodology, which seeks to make several small changes as they perceive a bigger crop, rather than to shock the market. Part of that is that we just are having trouble coming to grips with the idea that the sun hardly shone this summer, but we are close to an all-time record crop.

In December we have seen March Chicago corn futures at 4.21 on the 1^st and at 3.78 on the 9^th. We got back to 4.10 on Monday, but are closed the Tuesday early session at 4.05.

At the same time January soybeans were 10.78-1/2 on the first, 10.19 on the tenth, and back to 10.59 on the 14^th. The early Tuesday market closed at 10.52-1/4.
Without a surprise in the January reports, we have no reason to get back to the highs. Well, at least not from the grains themselves!

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Market turns back south

Last week we looked at charts, trying to find signals of direction. Well, we know more about direction now.

Corn prices broke sharply on the Chicago Board of Trade this week for no particular reason I can think of. That should give you confidence that you are not wasting your time reading this!

Actually, the biggest reason I can think of is the one we looked at last week—technical analysis. Last week I said that sometimes the markets, in absence of fundamental supply and demand news, trades by looking at the charts. That seemed to be fulfilled this week.

Take a look at what I said: "Taking a look at March corn futures, we see that we are working on a triple top formation. This is a strong signal. It can mean that the overhead resistance, which is the line that connects the three tops, is getting stronger. It can mean that we need really big news to break through that line. On the other hand, it warns us that, if we do break through, we will make that the support line, and may trade strongly above it, with an opportunity to trade as high as the next high back on the chart.

"With March corn futures, that means that we have strong resistance to prices going higher at 4.25. We hit 4.24-1/2 on October 23^rd, then 4.25 on November 18^th. Monday we got to 4.20-1/4, but also had 4.07 the same day. The overnight electronic session closed just below 4.18. So, we are making a run at the highs, and we are currently failing."

Even a blind hog gets an acorn once in awhile. Corn and wheat markets are sharply lower this week, with corn breaking 37 cents off the 4.21-1/4 December 2^nd high, then recovering most of two cents overnight Monday night. If you think about it, that means that once again we experienced that dreaded "Turnaround Tuesday." We made the high Tuesday, and then went nine cents lower the same day. Also notice that we did not quite get back to the 4.25 double top area. We ended short, and that was a negative signal.

Now if we go back to the chicken entrails, err, March corn chart, we could see a support line that connects three lows before the recent break. Draw a line line connecting the last three lows and you learn something. The three successive lows were improving. That is, each low was higher than the one before it. We were 3.72-1/2 on November 11^th, 379 on November 9^th, and 390-1/4 on November 24^th. Extend that line and you find we broke through what we hoped would be support when we went to 3.84-1/4. Depending on your drawing, that is most of a dime below the line.

So, as we continue the technical analysis, we have to be discouraged about corn prices. Our best chance to sell corn just passed, and it was at an unusual time—while harvest was finishing. Our next chance for news does not really come around until the January USDA Inventory Report. If the yields in the country as a whole are like the ones around my home, the hope of the crop being smaller to help prices is gone.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

The rearview mirror market

It is hard to get a handle on where markets are going these days. The easiest method, with the least recriminations when you are wrong, is to look in the rearview mirror. Volatility and outside markets are confusing things right now, but the charts give a fairly clear picture. Grain prices have been jerked around by weather –driven harvest delays and the mood changes in the markets because of them. The price of gold and the (related) value of the dollar against other currencies has meant more to the market some days than supply and demand.

Chart analysis, or technical analysis, is an attempt to predict where we are going by looking at where we have been. There have been clear signals on corn and bean charts lately, but that does not necessarily guarantee the future.

Taking a look at March corn futures, we see that we are working on a triple top formation. This is a strong signal. It can mean that the overhead resistance, which is the line that connects the three tops, is getting stronger. It can mean that we need really big news to break through that line. On the other hand, it warns us that, if we do break through, we will make that the support line, and may trade strongly above it, with an opportunity to trade as high as the next high back on the chart.

With March corn futures, that means that we have strong resistance to prices going higher at 4.25. WE hit 4.24-1/2 on October 23^rd, then 4.25 on November 18^th. Monday we got to 4.20-1/4, but also had 4.07 the same day. The overnight electronic session closed just below 4.18. So, we are making a run at the highs, and we are currently failing.

The March corn futures are way above the pre-harvest low of 3.15-1/2 on September 8^th. The slow harvest, and a reduction in the predicted crop size was part of that. Outside markets added the rest. If we could, in fact, break through the resistance, the sky is the limit. The last high before harvest was clear back in June. Then we traded daily highs of from 4.78 to 4.82 for eight days.

Now, the soybeans. January soybeans have shown steady gains since the low of 9.51 in early November. We traded an overnight high Monday/Tuesday of 10.74, a buck and a quarter higher in less than a month. In the process over the last two days we have broken through the old high of 10.58 made in the middle of August when we were worried the crop was in trouble. In between we had an August low of 8.85.

So, we have broken the old high. Now our objective is 11.05, made the 11^th and 12^th of June. Realistically, however, we can look at these three highs as forming a line of resistance. If we connect them, we can argue that we are already topped out.

So, what kind of news can make a breakout? The delayed harvest can help, but the market is not reacting too strongly so far. We will know more in a few minutes when we open. Yesterday we learned that the corn crop was still only 79 percent harvested in the country, although Ohio is ahead of that. We should be done. There may be harvest losses, but local talk of yields in some fields as high as 265 bpa is not encouraging that idea.

Meanwhile, basis nationally is at a five-year low, at minus 55 the March. Imagine the basis if we had got the crop off fast!

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Harvest struggles to its conclusion amid volatility

When prices go up and down, sometimes without reason, we call it "volatile." When we can explain it, we describe cycles and retracements and corrections. We have a basket full of adjectives to describe the chicken-entrail sketching on our charts.

This market we just describe as erratic. That means it has evaded the grasp of our vocabulary, and we are just reporting what happened. No one in his right mind is predicting what is next, but is rather just speculating on what can happen.

Part of what can happen will be speculated upon or even predicted by the brave and foolish, this afternoon after the latest USDA Crop Progress Report. The corn crop, which should have been binned three weeks ago, is still partly in the field. This afternoon Uncle Sugar will tell us how big that part is.

The delayed harvest has helped prices on some days. Those are the days when traders feel the crop will never be finished and we are losing some of the supply we thought we had figured into prices. Some days prices go down. Those are the days when traders think that it doesn't matter how long harvest takes, the corn is still there and it is a big crop.

Producers have been more focused on space than on price. Some have looked ahead to sell deferred corn on days the market has been better, and that makes sense. I quoted 4.20 ti a man this morning for corn I would pick up at the farm in January of 2011.

Mostly though, farmers are just selling enough to get the crop in the bin. Then, they will sit on it, dreaming of $7. Or $4.50, or $5 or some other magic number which, when we get there, they will think is too cheap. The hardest part of farming is not getting this harvest finished. It is doing the marketing. This is probably so because you are on your own. It is not your fault if it rains. It is your fault, and least it reels that way, if there is a high price for corn and you pass on it until it gets cheaper. It feels like everyone is in the same boat with the weather, but each marketing decision floats or sinks on its own.

The good news about corn for the harvest season is that it has gained over $1 a bushel in recent times. On September 8^th, with a crop report for the second biggest harvest in history staring us in the face, we made a recent low on December futures of 3.02. Delayed harvest, added to a small cut in USDA expectations in the November USDA Crop Production numbers helped us get to 4.13-1/2 December futures on October 23^rd. Now, a month later, we are trading just under $4.00, after a dip to 3.59-1/2 on November 11^th.

So, a dollar up, 75 cents down, 50 cents up and ten cents down (rounded off) pretty much describes a market that is erratic.

Meanwhile, the last ten trading sessions have shown steady, strong gains in the soybean markets. Yes, we had an ugly low October 5^th at 8.85-1/2 on the January futures, but after one short cycle we have been higher. We had a $10.29-1/4 high on October 23^rd, then dipped to 9.74-3/4 four days later. Since then we have been up, to the overnight high this Monday morning of 10.66-3/4. This is nearly identical to the 10.68 high made in the middle of August. You have to go back to June 11 and 12 to find a higher price. Then, we wondered if the crop would ever get planted, and we put in the 11.05 contract high.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Harvest drags into Thanksgiving

USDA released the Sunday night Crop Progress Report Monday after the close, and it was not pretty. Harvest still drags on, and rain coming into the Midwest this week will not help. Thanksgiving will come and go with corn and even soybeans still in the fields.

One of the biggest traditions of my youth was that we gathered for a noon Thanksgiving dinner, and then piled on the Carharts for one more push with the corn picker. This was in the dark ages, when we thought planting corn by the end of May was okay, and picking 250 acres of corn with just a two-row corn picker was high tech! It was, if you remembered opening fields by hand and picking corn into flat wagons, then shoveling them over your head into wooden slat cribs. I remember the first elevator, and the first time I saw silage wagons with a winch on the rear that pulled most of the corn off the wagon. Pardon me, I have slid directly into geezer mode.

The delayed harvest is the biggest reason for some volatility in the markets that set new benchmarks for the period on Monday's trading at the Chicago Board of Trade. December corn futures traded over $4.00 and January soybean futures bested $10.00. These are huge psychological numbers, and represent a significant bullish mood in the markets. The move is being described as "short covering." This means traders had sold the market short, anticipating harvest catch-up and record crops of beans and near-record crops of corn.

In fact, the market slogs on, still worried about the harvest and harvest losses of yield and quality. The end of day reports would be thought to encourage the market overnight, but the big news is that it went down, with corn and beans both off nearly a nickel. The December corn is now back below $4, but the soybeans hover just above $10.

The overnight correction would reflect that the harvest progress numbers were not really as bad as what some traders feared, and that they were already "in the market."

Looking at the reports we see that the nation as a whole is up to 54 percent planted.That is up from 37 percent, but is sadly behind the 77 percent of last year and the five-year average of 89. Ohio is slightly ahead of that, but only at 58 percent. I would not have been surprised if the number was 70, with the good weather we had locally, but there are a lot of acres to go. Our harvest is being slowed by wet corn, also. Farmers are reporting to me that the corn is wet enough that they can only shell for half a day before they run out of dryer capacity.

Iowa has caught up to our pace and reports have them 59 percent done, a gain of 25 percent for the week. Illinois is similar to us, at 52 percent, but gained 19 percent.

The nation's bean harvest still lags at 89 percent, with a 96 percent average.

So, this might be Turnaround Tuesday for the bulls, with the overnight pointing to lower markets. Adding to the negative news is the CBoT deciding to put a vomotoxin specification in the corn contracts. There is so much high-vomo corn around from this delayed harvest and cool summer that the Board is worried it gets delivered to Chicago. Three years ago the Board did the same thing to wheat and it contributed to a lack of convergence between cash and futures prices. Expect this to contribute to lower basis in the country.

 

 

 

 

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

In the dark, with guesses

The market is poised for action on Monday as this is written. USDA reports that can move the market are anticipated, but we are all in the dark at this moment.

Monday, after the close and after this is written, USDA will release the weekly report on harvest progress. Then, before the market opens again, we will see the USDA November Crop Production Report. These reports can be negative to prices, or positive, or even work against each other. Interesting times, and I get to make some guesses here because we have a day and a half to go to some answers.

Prices trended sharply lower last week as traders seemed to believe there was good harvest progress being made for a change. It remains to be seen if that is true, but we were sure coming from a long way back. Last week USDA told us we were all the way up to 25 percent harvested on corn! We should be rounding third and on the way home!

Even while the market was expecting big gains, the weather was spotty. Around NE Ohio, the combines were rumbling, and so were the complaints about how wet the corn was. The complaints about the yields were not so universal. There have been pleasant surprises. Those with high-test weight varieties have also had some good yields. One large farm operation in Trumbull County is reporting 200 bpa corn. That is not as good as the record yields of last year, but it is notable in a year of cool temperatures and worries about that effect on the crop.

We still have beans standing in some areas. Where the beans were being chased, the corn is not catching up. So, the USDA numbers will be interesting, then they will be dissected, then they will be disagreed with.

Remember, the perspective of the last big reports was for a record soybean crop and corn crop second in history. Along with the 13 billion-bushel corn crop was a usage slightly higher than that. The usage was supposed to blunt the size of the crop.

Last week corn prices declined the last three days on the Chicago Board of Trade. It is only in the Monday morning electronic trade before the pit opening that we have seen an upturn. December futures put in the recent high on October 23^rd at 4.13-1/2, then declined 54 cents in a few days. The futures then bounced 39 cents by the 4^th. We closed the week at 3.66, but are now trading 3.72.

With the November soybean futures now into the delivery process in Chicago, we are looking at January beans. The perceived catch-up in the harvest caused steep declines last week. We nearly matched the recent high on the 4^th, at 10.22-1/2. (We were 10.29 ten days earlier.) Three rough days on the market as the combines ran got January futures to a Friday close of 9.55, down 67 cents in three days. Overnight we have got that back to 9.62.

I expect the market to be shocked by corn harvest numbers that are still in the 50 percent range. This would be part of the explanation for the bounce overnight. However, improving weather will mean the delayed harvest has just about run its course in the attempt to push prices higher. The rain later in the week came out of the forecast this morning. A good week puts the crop in the bin and the reality of the huge crops back in the spotlight.

 

 

 

 

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Slow harvest, fast market

Dece3mber corn futures gained nine cents in the last five minutes of trade Monday. Traders seemed to be reacting to fears of lack of harvest progress. USDA released new harvest numbers after the close that seemed to confirm the bullishness.

December futures had a 24-cent range from high to low Monday. We had a spike high ten days ago (Octoberer 23^rd) at 4.13-1/2 December futures, but a low Monday of nearly 3.59. The high, just before the close, was nearly 3.84!

November soybeans had a 44 cent range, posting a 10.06-1/4 high. We were back to 9.89 when the overnight session closed, but that was more than a dollar above the October 5^th low of 8.78-3/4.

Prices have been volatile lately, and much of the bouncing around has to do with the deferred reality of the record bean crop and near-record corn crop we are trying to bin. This week again we made little progress on the harvest, and now it is November. The Halloween trick this year was continued rain that allowed intermittent field work in some areas, none in others.

Passed onto me via e-mail yesterday were a series of photos of a harvest near-disaster. It showed a tracked grain cart buried in the mud on one side badly enough that the track was out of sight and it was nearly tipped over. Two four-wheel drives and a track hoe were being used to excavate it. Maybe that is "extricate" it, but the first is closer to reality.

The reality of this harvest has yet to be realized. Do we have over 13 billion bushels of corn if three-quarters of it is still in the field the first of November? What are the harvest losses going to be? What about yields 20 bpa less than last year, with much of the loss being in lower test weight? What about vomotoxin problems that have corn in some areas being limited in where it can be sold? What about even ethanol plants with vomo problems as they try selling DDGS that has a vomo test of 15 parts per million?

The questions continue. What about soybean harvest losses? The farmers can't be getting all of them in the mud. The Delta farmers are losing theirs completely with flooding. So, is this a record bean harvest or not?

USDA provided some insight in the harvest progress numbers, but the January Inventory Report may be the real market mover. The government has the corn crop only 25 percent harvested, up just five percent from last week. That is less than half where we were last year, and the normal is nearly three times that, at 71 percent. By now it is normally only the northern areas that are not done, like in NE Ohio and NY. This week Ohio was spot on the national average, at 24 percent. We gained seven percent from last week, but lagged last year's 68 percent and the normal 60.

When you think of corn, you think of Iowa, and they are worse off than us, as is Illinois. Iowa has 18 percent of the corn off, and Illinois is at 19.

The lack of corn progress can be blamed on the slow bean harvest. The corn is standing. Snow will soon take down the beans. The U.S. is still only 51 percent harvested on the soybean crop. We cut seven percent last week, but normal is 87 percent, with only the Delta usually dragging any big acres.

So, the tale of this harvest is not over. We will be talking about it for years, and the markets will be reacting until well into next year. I continue to think these harvest delay bounces are selling opportunities. Sometime next year we will know if I am right.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Price correction on improved weather

Ya got ta love a market that crashes on the hope of better weather. USDA released the regular harvest progress report after the close Monday, but during the day the market crashed on news of better weather forecast.

Traders were apparently anticipating that there had been significant harvest progress for the week, and that there was good weather ahead. After the close we found that the progress was still painfully slow. The better weather that will allow periods of harvest has yet to be realized.

Certainly elevators were seeing a good run Monday and Tuesday, but both the bean and corn harvests are historically late. Many NE Ohio producers are still barely over half on the bean harvest. Those who have finished have shown little push to harvest corn because it is still quite wet. The high prices of drying gasses has imposed more discipline that usual the last few years. Locally I am seeing some corn harvest of historically wet ground, but mostly just an "opening up" process. A hard freeze has helped get the last of the green out of the stalks. This is the week I expect corn harvest to get going more generally. However, no one is going to get excited about corn with beans still out.

And, the beans are still out in Ohio. USDA reported Monday that the Ohio harvest was at 75 percent, which is behind last year's 87 percent, but ahead of normal (78 percent). This would indicate that Ohio is much better off than other areas. The US as a whole is at 44 percent, barely more than half the normal pace of 80 percent. That was up only 14 percent for the week, and October is over this week. Leading states of Iowa and Illinois are a major reason for the slow progress. Iowa is at 47 percent, and Illinois is only a third done.

The corn is a similar situation, only maybe worse where farmers have not even started. The nation as a whole is at 20 percent of harvest. Normal is 58 percent. We gained only three percent last week. Ohio is similar to the nation's trend. We have done 17 percent of the corn, up from eight last week, but terribly behind last year's 52 percent and the average of 45. Iowa is at 33 percent, where the average is 86.

Markets had made contra-seasonal highs because of fears generated by a late harvest. A late harvest assumes some loss of yield and quality, and puts immediate pressure on a pipeline that is low is supply. The perk in perceived weather broke prices dramatically Monday. Corn and beans were both down nearly 20 cents on all contracts. The wheat was down slightly more than 20 cents.

It would not have surprised me if we had not seen gains overnight, as traders digested the USDA reports. They would have to be thinking the harvest had been overestimated. This did not happen, as prices are marginally higher on the overnight. The day time open will show us the true mood of the market. The big crop forecasts, if realized soon, will still reflect a market that is overpriced on harvest concerns.

But, the market has proven that any glitches or surprises will have outside consequences in prices this year.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Contra-seasonal rally

 

In the normal order of things, prices go down as we approach harvest. Not this year. Prices have rallied sharply in corn, beans, and wheat, and market watchers like me are stumbling around looking for a reason.

Last week we talked about surprises in the USDA Crop Production Report. Uncle Sugar says the corn and bean crops are even bigger than expected, but prices refused to go down. I gave as excuses for the market action the delayed harvest and frost worries. The frost worries were a little too late to be a concern.

So, what do we have for the last week? A little retracement, then back near the highs.

Rains continued until the end of the week, so harvest progress was slow. Thursday night had snow flurries in Cherry Valley, and two inches of snow in parts of Western PA. Sunday was beautiful, an example of why we like to live in Northeast Ohio. Monday through Wednesday are supposed to be similar, only warmer, so look for the bean harvest to go a long way toward catching up. That catch-up will be at the expense of the corn harvest, however.

Monday USDA released the current estimates of harvest progress, and it is ugly. The US has beans at 30 percent, up from 23 last week. That is way behind last year's 64 percent, and the normal 72 percent. Ohio is similar to the nation as a whole. We had 34 percent harvested, up from 28 percent, but less than half of last year's 77 percent. Last year was ahead of the normal 68 percent. Some Western Corn Belt states are even worse. Iowa posted 37 percent harvested against a normal 85 percent.

The US has corn 17 percent cut, up only four percent from last week. That lags last year's 28 percent and the average of 46 percent for the last five year. We are hugely behind. They show Ohio at only eight percent, up just two percent from the week before. Frankly, I wonder who could have done that two percent. Last year this time we were at 35 percent, a little above the average of 31. Some of the biggest-producing states are the worst. Illinois has an average of 68 percent harvested at this time, but came in at only 11. That was up five percent for the week.

The market will continue to focus on harvest progress, and maybe that will drive prices, but expect volatility. Recent moves have caused producers to put in targets which may be unrealistic once we get the huge crops in.

November soybeans made a low in early October at 8.85-1/2. Harvest delays pushed that to $10.13-1/4 in a little over a week. This week, on the 15^th, we retraced to 10.02-1/2, but we traded a high of 10.08-3/4 overnight Tuesday morning.

The December corn was near $3.00 in early September, but had hit 3.88-3/4 by last Wednesday, the 14^th. of October. That did not hold, as we retraced to 3.68-1/2 the next day, but the overnight this morning put in a new recent high of 3.89-1/2. It would appear that the delayed bean harvest market is becoming a delayed corn harvest market.

While this was going on, December wheat futures were putting in the bottom in Chicago. Wheat has been in steady decline since the first of June, when the December put in a 7.25-1/4 high. October 5^th we bottomed at 4.39-1/4, and we have rallied as high as 5.29 on the 14^th. Currently December Chicago wheat is at 5.18.

 

 

 

 

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

Head scratching in the Corn Belt

By Marlin Clark

It wasn't that long ago that I was telling callers that we would go back to test the 3.02 December futures low on corn. I was also leaning to the idea that soybean prices had been supported by old crop shortage and good demand, but prices would decline as soon as we could sniff the new crop.

To say that these things did not happen is an understatement. December futures hit 3.83-1/2 both Monday and on the overnight Tuesday AM. This is the highest price since June 30^th. November soybean futures have rallied $1.33 since the fifth of October, to 10.12-1/4 overnight Tuesday morning. This is close to the August 30^th high.

To say I was wrong is an understatement. My head-scratching is causing a rash. Soon this will be known in my office as the bloody scab market.

The amazing thing is that this rally comes as the government is telling us the crops keep getting bigger. Friday USDA came out with a production of 13.018 billion bushels of corn, up from the 13 even of last month. The soybeans were increased by five million bushels, to 3.250 billion. Friday's reaction, after the report, was for beans to be up 28 cents. Corn was down a coupla cents on a confusing, what-do-I-do-on-a-Friday 15-cent range.

Traders made up their mind on corn Monday, pushing December futures 19 cents higher. The question remains, why?

Two factors are pushing prices. First, for all the talk about big crops, the crops are late and winter is coming. In the heart of the Corn Belt, little corn is off and the beans are being cut only on the second day after the daily rains. That means, mostly not at all. Bean combines were running in my neighborhood Monday, but most areas were still rained out from Friday.

The second factor is a disagreement about reality. Try to find a farmer or an elevator manager who agrees with the USDA numbers! We had the summer without sunshine, and corn is still green. The corn that is off is resulting in grumbling about low TW, with a lot of 52-lb. stuff being talked about. Hopefully, we end up with 54 for a crop, but if you are in an area that 58 or 60-lb corn is normal, you can be looking at 10percnt off that near-record crop right there. What if a TW problem represents a billion bushels less corn?

It is not just corn TW. Farmers are talking about widespread white mold in soybeans and ear rot in corn. So, we might have quality problems to add to reduced yields.

Now, USDA is easy to beat up. Farmers generally believe that the government plays games to manipulate prices. I don't believe that is true, but the mythology of this is large. An example of this not being true is that fact that "large crops keep getting bigger." In fact, this is USDA not wanting to put in big numbers one month, then taking them out the next. They stay conservative with the large crop projections until they really are convinced, and they add to the crop estimate each month.

So, which is it? Do you go with USDA or with your gut? Is your gut your excuse to do nothing? With these gains, it should be time to reward the market, but the impulse to wait until the bins are full is strong.

 

 

 

 

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Swimming into new crop

The best thing I can say about the three inches of rain I have dumped out of the rain gauge over the last few days is that it did not come in October. Much of the corn has been chopped, and the beans are not ready. We don't need the rain, but it is not holding harvest up much. I would hate to be trying to plant wheat, however.

Still, this is the time of year when we worry if we are going to have 60's and sunshine or if rainy fall runs into snowy winter. I remember picking corn on an open tractor in 15-degree weather, and I shiver from the thought. I remember the fifty acres of beans we ran on frozen ground in February, and trading grain seems like an easy way to make a living.

This is the time of year when I starve out my truckers as we hunt for the last give-up bushels of corn. Farmers are tempted to leave them in the bin now that they did not sell them a dollar ago and they are not sure of the size of the new crop.

Trader talk this time of year is all about USDA projections and why the traders know better. The market trades the USDA numbers like they come from the Book of Revelation, but they talk out of the side of their mouths about why USDA is wrong.

Take your pick of suspect guesses by the government gurus. The corn crop is not nearly 13 billion bushels. The summer was too cool for the corn to do that well. The usage next year is not going to be over 13 billion bushels to bail us out of the big crop. Uncle Sugar is expecting way too many corn bushels to go into ethanol when that industry is still running losses.

Soybeans are subject to some of the same scrutiny. The support in bean prices while the corn was dropping was due to the shortage of old crop beans, the traders argue. We were told in January that we would run out, and now in September we have not, but it has been close. The high prices have rationed usage. The bean processors that would not contract meal because they worried about having beans to crush are now smelling new crop. If it would stop raining, they would have it.

So, if it was the old crop shortage that supported prices, the argument is that the new crop will collapse as soon as we start filling up bins with the new crop beans. In fact, there is a near inversion in the soybean market that would confirm that thinking. The highest-priced month is January, just a nickel over November. There is a penny carry to March instead of a normal ten or 15 cents. July futures are essentially the same as November.

It is encouraging that corn has not gone to zero, though it made a run at it. We are actually forty cents off the December futures low of 3.02 on September 8^th. There has been a lot of volatility to confuse things. One day we were up four cents and the next down for cents. The optimist says we are going higher, the pessimist says we are going lower, and the realist says the market did nothing for those two days. I am reminded that Pappy always told me that there are three kinds of people in this world: pessimists, optimists, and realists. He says no pessimists should farm and very few realists do.

The realist in me says there is nothing new under the sun. Eventually, and soon, the crops will be off and we will be smarter, but not necessarily wiser. The corn crop will be smaller than expected, or larger, or the same. The big crop keeps getting bigger statistically by the USDA method, but the corn is not corn until it is binned.

Soon the talk will be about the high price of propane to dry all the corn, and farmers will be complaining about how cheap my price is for the bushels they have left over that they didn't think they were going to have a couple of months ago.

Then, the combines will get parked, and the hard work begins. Growing it is always easier than selling it.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

The Squirrel and the 'Possum

A story of American Agriculture

 

I have had bird feeders close to the house for 35 years. The bear tore them down a couple of times a few years ago, and we had to stop feeding for a month. Other than that we have always fed a herd of a few hundred "livestock" as I call them. Most of the customers are very regular. The chickadees are nearly tame, and stay in the lowest branches of the tree when I am filling the feeder. One frozen goldfinch let me pick it up on my finger last winter.

Fairly regularly when I take the "boys" out, I have to tap the glass on the door to scare away a squirrel. If not, the "boys," a black Lab and a white Westy, have to chase it instead of doing what I took them out to do. Some people try to keep squirrels away, not wanting to seed sunflowers wasted, but I figure he is just getting fatter, and he is fun to watch, and he is likely to just be a bigger meal for the Lab some day.

At night I have to watch for the 'possum at the base of the feeder. If I don't warn him we are coming, he quivers a little, then passes out. I have always heard that they "play possum." Not so. Some chemical, the opposite of adrenaline, hits his blood stream when he sees Chubbs, and he never moves another inch.

I think of these animals as I watch the grain markets these days. Corn seems to be headed to zero, if you are a farmer who remembers $7.00 corn. The bottom has actually been 3.02 on the December contract, but that is pretty ugly if the seed and fertilizer cost you so much that you spent $4.00 a bushel to grow it.

The market used a frost scare and a bullish USDA Supply and Demand Report to bounce to 3.47-3/4 a week ago, but that didn't last long. A frost scare requires frost eventually. We closed back at 3.16 yesterday, but have gained 3-1/2 overnight. November soybeans had a low of 8.92 on the 14^th, but was nearly 86 cents higher at one point the next day. The high did not hold, and we are now at 9.21.

Volatility in the markets gives opportunities some times, but the squirrel farmer and the 'possum farmer miss them.

The squirrel goes energetically to the market feeder with one eye out for something bad, but as he gets started nibbling, the ADD kicks in and forgets to pay attention to what is going on around him. Suddenly that lumbering oaf of a hundred-pound Lab who can't run as fast as the squirrel if he is paying attention, has chewed enough of him to get him in his mouth with only the feet and tail sticking out.

The marketing 'possum goes to the feeder tentatively, and at the first sign of trouble freezes in place. Unable to act, he loses his opportunity.

The little birds, meanwhile, nibble a little every day and thrive. No matter if the feeder is piled high or just has a few seeds in the corner, they do some regular marketing and don't worry . The market Lab can't bite them if they just do their job and don't hop onto the ground where they don't belong.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Low prices, more demand

Two old axioms of the grain trade were being talked about this last week. One is that a big crop keeps getting bigger. The other is that the cure for low prices is low prices.

The market continues to talk about a huge crop, and USDA keeps confirming that, but demand is growing. Several reports from Uncle Sugar kept the chatter going in the pits in Chicago Friday and Monday. Principle interest was in the USDA Crop Production Report and the US and World Supply and Demand Reports.

One long trend of USDA reporting is that in big crop years, USDA reports bigger and bigger crops in successive reports. That would be true for this year, as Friday they reported a two percent increase in the corn crop from what they projected a month ago, to an even 13 billion bushels. If realized, that would be seven percent more corn than we produced last year. They expect an average yield of nearly 162 bpa.

At the same time USDA pointed us toward a record soybeans crop of 3.25 billion bushels, up one percent from last month and ten percent above the 2008 crop year. The average yield would be 42.3 bpa, the third-highest ever. Ohio is projected to tie the state record average yield. This is understandable driving around my area where the crop looks to be by far the best ever. It is not understandable if some anecdotal tales of poor podding are general and not just reports from isolated farms.

Key to the USDA reports if we are trying to make sales decisions is the brightest spot in the reports: USDA says we will have record demand for corn! The pundits from Uncle Sugar expect us to use 13.025 billion bushels of corn this crop year. In other words, we will more than use of the near-record crop. As a result, the carryout that was feared would near the two billion-bushel mark will actually come out 60 million bushels lower than the projection last year at this time. We are now looking at 1.635 billion bushels of carryout, the grain left in storage at the end of the crop year.

The increase in usage is a reflection of the idea that the cure for low prices is low prices. At the lowered prices we are now seeing, demand is increasing.

Key to that demand is usage for ethanol. For all the industry has been suffering and seeing major shake-out of some companies, ethanol usage of corn is projected at 4.2 billion bushels, up from 3.675 last year.

It remains to be seen if these reports are correct. It remains to be seen if the result is more than the firming of corn prices we have seen the last few days, or the start of a step up in prices. Overnight corn is up a nickel, and is at 3.23, 21 cents better than the contract low we put in just a week ago.

Friday USDA projected that demand this year would set a new record.

 

 

 

 

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

While living in India as a student, I was tormented for awhile with a certain dream. I returned home to Cherry Valley after a year of wandering the world and the house I grew up in was gone. I could not find my parents.

The dreams stopped the day I realized the house was gone! I was remembering the house where it used to be. Dad moved it 900 feet east when Route 11 came through our farm. My dream was a mixture of reality and fantasy. My subconscious mind had not adjusted to the reality of the move.

I was experiencing what, in the modern age, we like to call a paradigm shift. The rules and circumstances had changed.

The grain business is in the middle of one of those shifts, and it is not pretty. The shift was to unlimited demand by the booming ethanol industry last year. The boom exploded prices until corn was worth over $7.00. The industry analysts talked like this was a shift that would forever change the landscape of agriculture. Corn acres increased sharply, resulting in exponential growth in input costs, limiting the profit growth for the producer.

That was then and this is now. Now we have ethanol plants bankrupted by those high corn prices, and sitting empty. Now we have the increased acres and good projected yields that have us with nearly a two billion-bushel carryover in corn coming. Now we have the high input costs to plant this crop that we cannot recover from the reduced prices as the new shift has us back to less demand.

December corn futures mad another new low on the Monday overnight, at 3.02.As recently as August 3^rd we were at 3.76. November soybeans touched 9.10 overnight, although they also traded at over 9.35. There is a lot of volatility, even in one day.

Harvest is close, and we should expect lower prices unless we are surprised by last-minute problems or yields. The real surprise though, would be conditions that would cause us to boom again. We are stuck with the shift in mood, the shift in conditions.

The house I grew up in is still there, in its new location. Mother rode along, playing the piano while it was moved. She is gone now, and Dad before her. The house went outside the family. I can't go home again. And, we can't go back to the markets of 2008.

 

 

 

 

 

 

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Harvest creeps closer

Time flies. The earth spins, the days come and go, and inexorably we creep toward harvest.

Many questions remain as we approach the end of the crop year. Not the least of these is, what size crop do we have? The government says it is huge, and recent revised USDA reports have traders back on their heels, trying to support prices.

The August 12^th USDA Crop Production Report put the corn at 12.761 bushels of estimated production this year. This is up a half-million bushels since the July report, and two thirds of a million higher than last year. It is also a coupla hundred thousand more bushels than the traders expected.

USDA now puts the soybeans at 3.199 billion bushels, a little less than the traders thought, and down 51 million from the July report.

But, try to find someone locally who believes these numbers! This has been the summer without summer. By my count, in Ashtabula County we had one day in August of 90 degrees, and that was for about 20 minutes before it slipped back into the eighties. The coffee break on the balcony in the morning requires a sweater. It just seems like we are ten degrees too cool on most days.

It was 43 degrees when I walked the dogs this morning. That seems a little cool for the first day of September, and it gets me thinking what a lot of farmers are thinking: should we worry about an early frost?

I am not walking the fields, so I am not sure just how far along the corn is, but it seems like we are late. A morning this cool makes me think that we are not that far from too cool, and it is only the start of September.

Now, farmers like to worry, and nothing will likely happen. Still, is seems like maybe the market should be building a little fear into prices. So far that is not happening. Over night we were down again, and prices are terrible compared to the cost of inputs. Of course, historically these are still good prices, and the market does not care what your cost of production is.

December corn futures dropped to 3.11-1/2 on the 17^th, then gained 26 cents by the 25^th. 17 cents were gone again in the next week. We closed the month of August at 3.20-1/4, about $2.70 new crop cast.

Beans had a high in the middle of the month at 10.66 Novembe3r futures, but were only 9.40-1/2 by the 19^th. Monday beans had a 51-1/2-cent range, and closed at 9.67-1/4. That is up off the low, but not what we would like.

The Chicago wheat futures have exhibited a steady downtrend, losing nearly $2.50 since June. We closed December futures Monday at 4.98-34, 18 cents better than the low during the day.

 

 

 

 

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Poised for a pop

Grain markets are uneasy and volatile ahead of new numbers from USDA Wednesday.

USDA will release the Supply and Demand Report Wednesday, and, as usual, it represents an untimely truth for the grain market columnist. I write this on Monday before the market opens, and the reader gets this on Thursday, after the report and after some market reaction to it.

Monday The markets were sharply mixed, with corn up four cents, but soybeans down 28-1/2 on the November contract. September wheat was up nearly five cents.

Overnight the mood changed in the electronic bean trading. Soybeans got back 17-1/4 cents, much of the Monday loss. Corn continued higher, up most of another four cents, and wheat was up over four cents.

For perspective, the corn market has taken a beating lately, but the beans had been on a rebound. December corn futures had a high in early June, the dark ages now, at 4.73-1/2. Of course at that time the magic number for forward selling seemed to be much higher. We broke over $1.50 to 3.14-3/4 in late July. In ten sessions, however, we put 61 cents back on, then lost 55 cents in the next week. That more or less defines volatility!

Currently the overnight is up near 3.30 December, a bounce off the low. Trading is likely to be slow during this one day anticipation, but anything can happen. The traders now say they are looking for the Supply and Demand Report to show a decrease in the old crop carryover to 1.748 billion bushels from the 1.77 shown last month. No big deal. The bigger deal is the expected new crop carryover, what is left over August 31^st 2010, to 1.7 billion bushels. That is up from the 1.55 billion in the last report. Keep in mind that we consider the level where supply gets "tight" at an even one billion bushels.

This comes primarily from a crop of 12.5 billion bushels instead of the last estimate of 12.29 billion. It should interest the reader that while the farmers are talking about the coldest summer on record and lack of heat units to make corn yields, the pros are talking about no yield-limiting heat spells and a huge crop.

The average trade guess for beans is a different matter. There most are looking for a smaller crop, and a smaller carryout. They also look for the old crop carryout to get smaller. That is what we have left right now.

The average guess is for soybean production is 3.225 billion bushels , down from the 3.26 estimate in July. They expect USDA to estimate an old-crop carryout of only 104 million bushels instead of 110 in the July report. The new crop is now estimated by traders at 212 million bushels instead of the 250 in the July report.

The case could be made that the report should be bearish for corn and bullish for beans. If fact, we have been sharply lower in corn and higher in beans recently, so that may not be true. I lean toward the idea that we will get a quick knee-jerk reaction, that is bearish for corn and not beans, then we will go back to trading the recent trend. That is, if the USDA agrees with the traders, the report is already in the market. A surprise will make us all cranky.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Corn leads grain markets higher

For the first time in a long time, corn has had days as the leading grain on the Chicago Board of Trade. That is to say, some days the gains in corn were more than the gains in wheat or soybeans. Some days the beans matched the corn, but with a higher-priced commodity where the gain was not as great a percentage of the price. In the process, corn has bounced 20 cents off the bottom created when USDA "found" three million acres more planted corn.

That is the good news. The bad news is that December corn futures are still under 3.35 after a high over 4.73 in early June. That high marked a technical retracement to the high or 4.71-3/4 made the first trading day of the year. So, we are more than a dollar and 35 cents off the high, and there is nothing on the horizon to made us think we are going back there.

The current price is a shock to the farmers that are still paying off input costs that were run up in the acreage rally fed by ethanol demand. As fertilizer and seed increased exponentially in price, we had one good year to sell corn, and that was marked by grain companies that were limited by margin requirements in forward contracting. So, the good prices did not get locked in, but the high inputs are still hanging around.
I ran into Doug Stiles of Western Reserve in Andover recently. He and I shared office space in the ancient past when we both worked in Jefferson. I asked him, "Doug, am I crazy, or do I remember buying $62 potash?" He agreed that was the price back in what now seems like the dark ages.

When farmers call these days, it is to talk about how cool it has been and to sell a little corn they wish they had sold earlier. The cool weather is becoming the talk of the Midwest, with something like 3000 reporting stations in the US reporting the lowest average temperature on record. You will notice that the climate talkers are now talking about climate change and not global warming. Now any variation from the norm is our fault.

It is noteworthy that corn progress is not much behind normal locally, even given the cool weather. I credit the warm May for this. I can remember planting corn in the end of April and not seeing it until the first of June. This year it was knee high the first of June. It has just been slow since then. It has been slow to grow out of the hail damage we had locally a month ago near Rt. 11 and Rt. 322 in Southern Ashtabula County. Millers' corn is growing out of it and is not showing the damage, although it will show in the bin. Coltmans' corn was not hit as hard, and it is looking almost normal. The beans are another issue. Bob Wood's beans are not growing out of the damage, and Millers' may never fill the rows out. It is ugly to watch.

We are near August now. If we fire up some heat we will have good crops. If we stay cool, the crops will be smaller, though not as much as one would think. The lack of heat is eliminating the acres that are hurt by hot weather nearly every year, so the average is not lowered as much as one might expect. The market will start to get sensitive to weather in September. The agronomists will be walking fields looking for black layer. Traders will worry about an early frost to hurt the late corn.

The market is a disappointment, but the biggest disappointment is always a small crop. Cross your fingers.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Small green apples

In one of the Zane Grey novels I poured over in my youth (as an adult I stick to Louis Lamour), one of the cowboy characters would declare on special occasions, "Thank God for small green apples!" The thought was that whatever had happened was not a great thing, but it was at least positive. How positive depends upon your taste for those small green apples.

I think of that this Tuesday morning as I look at the overnight trading on the Chicago Board of Trade. September corn futures are up four cents and November beans are up nearly six. Wow! Corn futures have dropped $1.40 and soybeans have dropped $2.00 in a month. Maybe this is Turnaround Tuesday!

Yes, there is a little sarcasm there, but when the turn comes we will look at a trade like this and say it started here. Maybe this is it! Thank God for small green apples!

The slide started the first week of June as the weather worries went out of the market. The late planting seemed to be less of a factor when the crop actually got planted and the sun shone. As the slide seemed to slow down we hit the June 1 USDA Grain Stocks reports that said we had a lot more corn and beans than the trade had been figuring on.

USDA reported just over 87 million acres of corn, that was two million more than the March 31^st Planting Intentions Report and three million acres more corn planted than the average trade guess. USDA report soybeans planted on 77.44 million acres. That was 154,000 more than the Planting Intentions number, but it was half a million under the average trade guess.

It makes sense that the corn plunged on more acres, although it is interesting that beans plunged even though the trade was supposedly looking for more acres. Corn dominated the thinking, and the markets have been ugly.

So, when we have a market like Monday where September corn futures hit near 3.20, then came back to close at near 3.32, we can get excited about the overnight being higher. We are now 15 cents off yesterday's low, and we hope that means something. Hope is all we have right now. At the same time, November beans hit a low of 8.92-1/2 Monday, and are now at 9.17-1/4. That is nearly a 25-cent bounce. A positive trading day today will give us some breathing room.

So, say this little break in the downward move holds. Then what are we looking for? I don't know. I worry that farmers will shoot for the moon betting on a summer rally. The advice letters all say sell the basis and bet on another rally. That is fine, but is the rally for 20 cents or a buck? Any real move requires a reason. Right now the only one we have is that the prices got so low that the specs are looking for a reason or an excuse to get back in.

What is the technical or fundamental excuse they need? Weather is a little cool? The stock market rallies? A hot and dry August burns up the beans? As usual, most of the things that could help prices we really don't want to happen.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Hoping for a hat rack market

 

I have to admit I love to coin names for market moves. You have seen a lot of weird ones in this space. None of them have ever caught on generally, as far as I know.

This morning the effort is the "hat rack" market. That is where we are right now, as we look for some kind of market news to "hang our hat on." You know what I mean. There must be some piece of news that will turn this market around.

Maybe the news will be in the USDA Supply and Demand Report. Maybe it will be in the Crop Production Report, out in two weeks. Maybe it will relate to the weather. Shall we bet on too wet or too dry? Just hope the bad weather is for the other guy.

Bad weather has hit PA the last few weeks in the form of torrential rains. A few days ago Jon Hart in our Mifflintown office was bemoaning the assumed damage in the wheat crop there, with ten inches of rain. That rain pattern has not improved, and it did not improve his attitude when I told him we had been dry and needed the rain we were getting. One man's trash is another man's treasure.

Prices have plummeted the last few weeks, with last week being mostly a market in a holding pattern looking for news. The calendar page is moving to July. We spent June worrying about the crops being late. We normally spend July worrying about being too dry. The traders need to be worried to drive prices higher, and we are struggling to find worries. The market is not concerned with the wheat crop in PA any more than it lies sleepless worrying about crop problems in NE Ohio. We are not a big factor.

General rains are delaying the Plains wheat harvest, however, and that becomes a factor. It has not shown up in the markets yet, as the wheat where the harvest is not is still enjoying one last drink to fill berries.

It was the speculators that ran the prices up in April and May, and they have fled the market, leading to the decline. They are fickle, looking for a short-term profit. They can jump in just as fast as they dropped out, but they need a reason.

Overnight prices are higher on the Chicago Board of Trade. There should be a reason, but the best I can come up with is the trend to a "turn-around Tuesday." It is common after a down week to change prices on Tuesday. September corn that was down seven cents Monday is up three on the overnight trading. July soybeans were up 14 yesterday, but most of the day the November beans that we are focusing on were down seven. That is because this is an old-crop rally, pulling along the new. The rope pulling the new got broken by the pull of good crops in the ground.

Chicago wheat futures were down Monday, but are up overnight. The hard wheat harvest has been going for nearly two months. The soft is starting. Prices will normally decline in harvest unless the harvest is disappointing. If rains degrade the quality yield of the crop that will change.

Locally it seems the Millers' Ammonia crowd has been working overtime, and most of the N is on. The rain has stopped the field work, and most of the corn is too high now for side dressing anyway. Several Wayne Township farmers did not like the weather Thursday night. Hail did drastic damage to hundreds of acres of crops near Rt 11 and Rt. 322.

Personally, Monday was a great day in Ashtabula County with Squeeze and me celebrating our 35^th anniversary. Dinner was at the Welshfield Inn, but I did not drive two miles south to visit Rick Briggs's farm while I was there. I thought about it, but I have learned something in the last few decades with Squeeze.

 

 

 

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Big crops, big disappointment

Prices have broken sharply on the Chicago Board of Trade the last few days. The perception of a good crop and outside markets continue to ravage what was a welcome rally.

Monday trading was an example of how bad it gets when the speculators run out on the market. Soybeans were down 27-1/2 cents nearby and down 25 cents in the new crop. In the process they broke the perceived support line of around 9.75 November futures. USDA reported soybean planting at 91 percent for the country in the Monday report, ahead of normal and last year. That last market checkpoint has not been passed, and we will see no support from delayed planting, even with the rain that will continue to delay the last acres.

July corn futures lost 14 cents, and closed just above the support line. July wheat futures lost most of a dime, even as traders are talking up possible disease problems in the Chicago soft red crop because of heavy rains.

The rallies of the last two months have been fueled by speculators adding to positions as they expressed concern with late planting of corn and weather problems in general. When the dry weather returned and planting caught up, the mood switched to fears of dry weather. Now, most of the Midwest has too much rain. That is a worry for wheat, but traders see it as being good for corn and beans. "Rain makes grain" is the cry in the pits, and until the rain reaches the near-Biblical proportions of 1993 (is that the right year?) that cry will continue.

That the rain is a problem for wheat is the talk now. The area around our Mifflintown, PA office has had ten inches of rain in the last few days. It comes at just the wrong time for wheat and may promote scab disease to a nasty level. Jon Hart, our trader there, is worried some areas will have yields cut in half.

The question will linger for a couple of weeks here how widespread the damage is. Will Ohio, the largest soft red winter wheat state, see significant damage, or have they just had enough rain to fill out the wheat? What will be the difference from southern Ohio to the north, with the change in maturity? The exact state of growth when the rains hit is the critical matter.

Looking at the prices, we see wheat futures on the CBoT have had a steady downturn since the first of June. The July futures high was 6.77, and we hit recent low overnight this morning at 5.41. That is down $1.36 in three weeks. A lot of this would be a seasonal loss, as we are in harvest in the hard wheat country. So far there is no recovery based on scab damage.

July corn futures exhibit the volatility that has farmers discouraged. Those who were waiting with the last bushels for $5 are now begging me for $4, and I am 3.75!

July futures hit the recent low of 3.70 the end of April. It was a slow climb, pulled by beans and delayed planting, to the 4.50 high of early June. In the next three weeks we lost 70 cents, hitting the low Monday. Overnight we have bounced a nickel.

The July soybeans have led the inverted (early months higher than deferred) market. With only two brief dips, the beans gained $4.50 from early March to the June 11 high of 12.91-1/4. Since then we have broken the price $1.41-1/4 to the Monday low. We traded 14 cents off the low in the overnight.

 

 

 

 

 

 

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Scoping the whazzuupp market

Prices have crashed on the Chicago Board of Trade the last few days. Especially on Friday and Monday we saw huge declines in corn and bean prices, and analysts have plenty of reasons why.

Pardon me for being cynical, but it was no surprise that the remarks published after the cruddy markets Monday were mostly about "outside markets." When you are fishing for reasons for a decline, blaming it on the other guys' trading is always a good way out. It may even be right.

The term "outside market" refers to anything traded that is not agricultural. This can be the stock market, the financials, or non-ag commodities such as metals and oil.

Monday afternoon the talk was about the U.S. dollar being up nearly one percent and the stock market being down. The dollar is a big factor, as it makes our grain more expensive, priced in dollars overseas. The stock market is a reflection of the economic mood of the country, and down is mostly bad.

Add to this the magic word "Obama," as the President was poised to release his vision of a revamped financial market on Wednesday. This creates uncertainty in the outside markets, and uncertainty today meant cheaper grain.

On the fundamental front, the weather was seen to be becoming a non-factor, normal pattern. Crop conditions were improving over the Midwest. So, better crops, worse prices, a lessening of the production uncertainty that makes grain prices go up.

Successful traders are market followers, and market followers look for answers in those modern chicken entrails, our charts. The charts are ugly after Friday and Monday.

Corn, soybeans, and wheat all show a major turnaround from the bullishness of the last three months. It may be significant that the seasonal rallies in spring grains tend to run out in mid-June. The farmers think it is July 4^th, but that is only when the bad weather continues. We always have some kind of weather rally, and this one has stalled from lack of bad weather.

July corn futures lost 35 cents in two days. The recent high of 4.50, reached several days the first of the month, has become the recent low of 4.05-1/2 on Monday, with a rebound to 4.10 overnight going into Tuesday.

July soybeans gained over $3.00 in six weeks, to a recent high of 12.91-1/4 on Thursday. It never had a downturn in that time.. It gained $4.50 in two months. Now, we have broken below $12.00, and bounced back to 12.14 overnight.

July wheat futures are reacting to wet weather delaying harvest, but still have lost over a dollar after gaining $1.64 in tow months. July Chicago wheat futures are currently 5.81-1/2 overnight after an excursion to 6.77 June 1.

It is too late to say the weather market is over, but profit taking to changing that old rally of mine.

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

New highs, same whys

Corn, beans and wheat have made new recent highs on the Chicago Board of Trade this week, but there is no surprise. The same factors that have pushed prices the last month continue to effect the ideas in Chicago of price discovery.

Price discovery is the term the grain trade uses for finding the right price in the right time period for grain. By running a grain auction continuously, the CBoT does not set the price, it discovers what the market thinks the price should be. This is not just semantics, it is a striking distinction, especially for those (mostly farmers) who think the Board controls things.

This has been a soybean rally. Good exports and the fear of actually running out of beans has the processor markets bidding up basis and the Chicago Board running up prices. This has been in spite of delayed corn plantings that could auger a switch of some acres to beans.

The numbers from USDA show that we have mostly caught up the corn plantings, although we are will past optimum dates for best yields. Now the focus is actually on slow bean planting in critical states that may cut yields.

At the same time the market has focused on soybeans, corn has rallied on the delayed planting, and on the bootstrap effect of the soybean rally. At this point, the corn rally should be expected to lose steam and just go along for the ride.

Wheat, meanwhile, has some yield issues, with delayed harvest from rain in the Southern Plains and delayed planting of spring wheat in the Northern Plains.

Let's look at the numbers. USDA as of Sunday night had the US at 93 percent planted for corn. That was up from 82 percent the week before, and right at last year's 94. It is a little behind the five-year average of 97 percent.

Within those numbers, Ohio was at 97 percent, right on the average, up from 76 last week, and above the 93 of last year. Indiana and Illinois remain the problem. They gained significantly over last week to 78 for Indiana and 82 for Illinois. They should be done.

Those two states are far behind in bean planting, and that is pulling down the overall numbers. The US is at 66 percent soybean planted, versus a normal 79. Ohio is at 84, just above the 83 percent average. Indiana is at only 50, and Illinois is an amazing 34 percent planted.

MI, after an awful start I detailed two weeks ago, is now caught up on corn and close on beans.

On the Board, the new highs were 4.45-3/4 for July corn, 12.27 for July soybeans, and 6.77 for July wheat. All three of those are lower on the Monday/Tuesday overnight.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

The quick trip from cry to dry

Most of the spring the talk has been about how wet it has been. Farmers have been struggling to plant crops between the raindrops. There were some close-your-eyes days when the ground got worked wet because the forecast was for wetter.

Now is the spring of our discontent. Now we are starting to talk about how dry it has gotten. Now we are wishing we had not poked seed into mud that might crust over it. Now we are remembering the year we planted 80 acres of beans behind Dad's house when he was adamant that it was two days too early. Well, at least I am remembering it. The beans crusted over and we hit the field with a rotary hoe twice trying to get some plants through the ground. Dad was never much for "I told you so," but the beans put out 35 bpa and I got a lesson in patience.

Last night Squeeze and I returned from a day of wandering to finish celebrating her "birthweekend." (Birthday is not enough!). As we turned in the drive, she asked if her white lilac had ever bloomed, so I just turned left and drove her by it. We ended up taking a crop tour of the yard, checking out the late-budding trees and some new plantings in our little arboretum. The lawn that I was churning holes in with my ZTR mower last week is bone dry this week. I could not hurt it, even with my All-American land yacht.

It was a nice drive. I mow six acres, which is my way of downsizing from 1200 acres of farming.

So, if it is dry, is the party over? The Board crashed overnight, with corn down seven and beans down nearly ten cents. But, that might just be a reaction to the gains going into the long weekend. It feels like the crop is still late, and we will know more this afternoon. There are several more days of rain in the forecast, though we are sneaking through with overcast and no rain right now.

And, even if we dry off and finish planting in the west, continued dry weather would just change the focus of a continued weather market. We can focus on damage from lack of rain, which is the favorite game on the Chicago Board of Trade. Nothing gets the attention of the guys in the pits and (these day) at their computer trading terminals as a good dry spell.

A look at the charts shows gains in beans that are surprising, and gains in corn more than make sense. July soybean futures have gained nearly $3.50 since early March. The high was on last Wednesday at 11.89-1/2, but we have slid 33 cents off that since.

July corn futures gained nearly 65 cents from the end of April to last Wednesday. We hit at or near the same high four times, which is a sign of a top. We have lost11-1/2 cents off the high to the overnight close on this Tuesday morning.

July wheat futures have rallied into the harvest, a common phenomenon for wheat. We hit the same low on the Chicago Board of Trade three times, on March 3^rd, March 20^th, and April 20^th. Since then we have rallied from 5.10 to almost 6.20 on the overnight this morning. The last leg is being pushed by wet weather that is holding up the harvest in the Southern Plains.

All this means that, as usual, there is a lot of price activity this time of year. There may be more. If the crop gets finished and normal rains come back, the prices will decline. Don't miss this opportunity, but beware of more to come in June.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Crop Tour is Ugly

I put in 750 miles in Ohio and Michigan over the weekend, and I was amazed how far behind we are in reality. Yes, the Planting Progress Report from USDA said that Ohio, Indiana, and Illinois are the problem with the U.S. being so far behind, but looking at miles of Northwest Ohio bare as far as the eye can see, which is several miles in the Black Swamp area, was startling.

Sunday I drove east from Maumee and didn't see a field planted until I got to the Ottawa County line. Even the light soils south of Castalia only had some fields planted. It was then I remembered that going out Friday, I only saw three tractors moving between Cherry Valley, Oh and Dundee, MI. None of them was bringing up dust.

We were going to a nephew's graduation at Spring Arbor College, which of course means you stay overnight in Dundee. That left Squeeze two hours at Silver Bell Christmas shop and two hours for me at Cabela's. Sure, I am willing to drive that far for a graduation—just let me stop at Cabela's! (I resisted the $10,000 shot gun and bought a belt and a laser boresighter. You can tell how the grain business is going by how much I buy here.

Actually, business has gotten busy as corn got above the magic $4.00 mark. We dropped back, then went through it again. Meanwhile, the soybeans are making new highs right through the Sunday-Monday overnight session. July futures hit 11.61 overnight, even with talk about switching acres to beans.

Exports are driving the beans right now, as the market ignores the unknown acre change and looks at a weekly export of 15.7 million bushels, when they expected 10 to 14, We only needed 12.9 million bushels to maintain the projected pace, so we remain ahead and gaining.

This is the week when the acres come into question, as now we are into reduced yields from delayed corn planting. The country as a whole is only 62 percent planted, up from 48 last week, but well off the 85 percent average. Even the slow pace of last year had us at 70 percent. Last year we still raised a big crop. This year it is getting smaller. Ohio is at 39, up from 22 last week. We should be in the 80's. Indiana and Illinois are in the 20's, and should be nearly done. Michigan (I don't give a darn, but the stats matter) has doubled acres planted to 41 this week, half of normal.

The market was defensive Monday, with good weather for the week projected. Corn was sharply lower overnight, but traded up four cents by the close. The reality is that the wet areas need this week to dry, and wet weather is returning next week. Ohio will get a lot in this week, but PA and Illinois will get dried out just in time for more rain.

So, this is a critical week for marketing, but more critical for planting.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

One-day age of Aquarius

The planets are aligning this morning in a manner that will be easier to interpret by the end of the day. Unfortunately, I have to write this on Tuesday morning, not Tuesday evening.

The planets are aligning, or even colliding, in the form of the USDA Planting Progress Report, out Monday afternoon, and the USDA Supply and Demand Reports, out before the open today. All make interesting reading, and all indicate another bounce in this bullish market.

I have said that the market had run out of steam and needed more fundamental news to sustain it. That would happen if we continued a slow pace of planting, I have told callers. Now, that is true, and there is more news besides.

The USDA US and World Supply and Demand Reports out this morning indicate a drawdown of supplies and point to higher prices. The grain trade was expecting a 1.71 billion-bushel carryout in corn at the end of this year. It got an estimate of 1.6 billion. That is not a lot, but it is in the right direction. It is also below the lowest trade guess of 1.645 billion. The soybeans came in as expected, at 130 million bushels. The significance there was not that it was not a surprise, but that it was 35 million below the April estimate.

The Planting Progress Report contains the immediate market-making news. However, the least surprise is in this report, as the market has been trading delayed planting for several days. This would be the reason why the bullish enthusiasm in the market recently had changed clothes. The last few days corn has gained at times when beans were lower. This is a reversal of a market that has been led by the beans, ever since the March 31^st acreage surprise. At that time we found out the corn acres would stay closer to last year instead of declining, and that we would plant several million acres fewer beans.

Now it remains to be seen if the acreage projections are correct. Corn planting in the country, led by the East, is sadly behind normal. In addition, there is disagreement as to how fast we catch up. Some forecasters think the wet patterns will hold us back this week and next. Some have stirred the chicken entrails and see clearing and a catch-up of planting. You roll the dice on this one.

What were the numbers? The U.S. as a whole, which is represented by the 18 major corn states, is behind 23 percent compared to the five-year average. We normally plant 71 percent of the crop by this time, but are at 48 percent. Last year we were also slow, and still raised a huge crop, however. This time last year we were also at 48 percent. That is the good news.

The bad news is that last year Ohio was similar to the country as a whole, but this year we are one of the laggards. Ohio as of Sunday was at 22 percent planted, up from 13 last week. We have a normal average of 68 percent, so are less than a third of normal planted. Indiana and Illinois are even further behind, and they are two of the four largest states for acres. Indiana is 11 percent planted, and Illinois is only ten percent done.

The soybeans are a similar situation. The U.S. is 14 percent planted, with 25 being normal. Ohio is at 13, but we normally are 37 percent planted.

Historically, even though we got away with it last year, this is the week that late planting starts to hurt yields. In Ohio the best yields come when we are done the first week of May. You can argue that the magic day is maybe the tenth or after for Northern Ohio.

Regardless, the late planting adds an immediate bullish factor to the bullish supply situation. The next week will make critical differences for the crop and the markets.

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor 415

By Marlin Clark

Blame it on the Bassa Nova

Every once in awhile something happens in the grain markets that finds me frozen in amongst tearing my hair out, laughing, or crying. That was me at 7: 30 Monday morning when I looked at the overnight trading from the Chicago Board of Trade and saw beans down forty-something, corn down 12, and wheat down 16 cents.

It wasn't the prices—we have gotten used to the volatility the last couple of years. It was the reason given—swine flu. You've got to be kidding! Makes as much sense as blaming it on the Bassa Nova, if you remember that old song.

I remember swine flu. I had it fall quarter of 1968 at Ohio State and missed a history final. I am not sure about the year, but I am about the final. I was too sick to get out of bed, but not as sick as I was when I saw the grade from the make-up exam. Those profs have no sense of humor about having to go the extra mile, and the makeup always costs you a grade.

Oh yeah—I also remember that I did not get swine flu from pig.

This is the reasoning, if you can call it that, for May corn futures down to 3.67 and May beans bottoming at 9.90 overnight Monday. The "swine" in the swine flu would get people to buy less pork, cutting demand for corn and soybean meal. You can't make this stuff up.

Now, I heard Dr. Bernadette Healy tell Bill O'Reilly last night how you really get swine flu, and it has nothing to do with swine. To paraphrase my favorite third-grade joke, some people think it's swine, but it'snot! (Is that word in the style manual, Miss Susan?) She put it in a more-socially acceptable manner, but the answer was still the same. Some of the stuff in a sick person's nose ends up in yours. Use your imagination how this comes about, but it probably has nothing to do with the last time you kissed a pig unless that pig was an ugly girl friend with a stuffy nose. That actually reminds me of my favorite sixth-grade joke, but I will show some discretion. Darn little discretion, but it is there, nevertheless.

The silly season on the Chicago Board of Trade did not last long. During the day we traded beans down 22 cents or so. We actually closed down 35-1/2, at 10.04-3/4 though, so it was a sick (I couldn't resist) day. May corn ended up down most of a nickel.

The overnight Monday-Tuesday is mixed. Corn is down another 2-3/4 cents at 3.69-1/2, but the beans are up most of a dime, and the wheat is back up over a nickel after a 24-cent loss from the silliness yesterday.

The real problem is, the market is not silly. Prices actually did decline as a guess as to the reaction of a silly consumer. That is a different matter. And, the fact that it could decline this easily is an indicator of how weak it is. May corn futures are now 47 cents below the recent high, back to the same low we made a week ago. May beans have now lost 89 cents of the 2.35 gain made between the first of March and the middle of April. The wheat is bouncing along now on the same low it has made three other times since early March.

BTW--If you just have to hear the best third-grade joke, give me a call. If you actually sell corn on this break, I will throw in my eighth-grade joke, too. Or, I may save it for another time I am desperate for a column.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Moment for 4/23/09

By Marlin Clark    

Remember today. Today the bean rally faltered, but the corn gained. Today represents a change of mood.

Since the USDA Planting Intentions Report nearly a month ago we have had a strong bean rally and a corn market that went along for the ride. Last week the corn could not even ride the bean coattails and fell off 47 cents from the futures high. Now, in four days this week we have got 21-1/4 cents back from the Monday 3.60-1/2 May futures low.

So, today, Thursday, we gained 7/1/2 cents on the May corn and lost over eight cents on the May soybeans. Why? Planting delays, or fears of planting delays. Fears that the corn acres get smaller and the soybean acres grow.

Take this one to the bank fast. While sources are telling us the corn is going in fast out west, the market is still reacting to the Monday afternoon USDA Planting Progress Report that says we are behind in corn planting. Maybe we are, maybe we are not.