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.