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.