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.