Market Monitor

By Marlin Clark

Fundamentals jerk markets around

Actual news instead of feelings and rumors is the influence on grain prices right now, and the effects are mixed.

Soybeans are using strong exports until recently to continue an uptrend in place since early February. Meanwhile, corn is weak on slow exports and fast planting.

It was no surprise to me that USDA reported fast corn planting Monday afternoon after the market close of trading. Friday night we drove to Findlay across 224 and the dust was flying everywhere. By the time we came home across the turnpike Sunday every furrow and depression was full of water, but a lot of acres were done.

So, Ohio corn planting coming in at 45 percent was expected, even though it was up from just six percent last week, and four percent last year at this time. Nineteen percent is the average. The trade expected 45 percent for the U.S., and had faded prices in anticipation. What they got was a whopping 50 percent for the country as a whole. That is up from 19 percent last week, and way ahead of the 22 percent five-year average.

Judging by the standing water, Ohio will not gain much this week, but we are still off to a start that makes for cheaper prices. We are switching our marketing to the July futures this week, so let's get started looking at them. The July corn had a low on April 1^st of 3.55. We rallied nearly 20 cents to 3.74-3/4 on the 16^th, but have now gone back to 3.56-1/4 on the Monday/Tuesday overnight session as this is being written. That was a quick pop, and all we are likely to get until the spring weather changes the mood of the market. All talk of a delayed spring is now gone, at least until we get two weeks of rain! The overnight trading confirms a little negativity from the planting report, with July corn futures down three cents to 3.56-1/2

The soybeans, meanwhile, have just had a one-day breather Monday in what has otherwise been a very positive market. The uptrend is firmly in place, although the market struggled Monday with the news that the export pace had slowed. USDA reported 8 million bushels of bean exports, and the needed pace is 8.4 million if we are to reach the projection of 1.445 billion bushels for the marketing year. Still, we are 16 percent above the needed export pace.

So, beans made a new recent high Monday, then closed 11 cents lower. Overnight we are down another 6 cents. That means we are now 17-1/2 cents below the Monday high on the July contract of 10.20, but the chart still is lovely compared to the corn.

The uptrend line for July soybeans is defined by the lows of 9.20 on February 4^th, 9.30 on March 15^th, and 9.39-1/4 on March 31^st. The 10.20 high means there has been a lot of volatility as we have gone higher. With the fast planting now slowed by rain, we are delaying any negative effect on the market of a fast planting pace for the soybeans. USDA is not yet reporting bean planting because it is historically early for that, but it should be noted that significant Ohio beans must be in. The current trend is for the well-equipped farmers to start them in April right along with corn. I have customers telling me they are more than started with the beans.

Chicago wheat futures had some noticeable excitement Monday, with a 31-1/4 cent range on one contract in five minutes. This is an example of a thinly traded market. We tested resistance near $5.00 on the May futures, then a sell order for 4000 contracts (20 million bushels) collapsed the market. May futures finished at 4.76, down 17-1/4 cents. The July is trading overnight at 4.87-3/4, down a quarter.

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

Goldman sucks air out of market

I gave a big "ho-hum" when I heard last week that Goldman Sachs, the big investment bank, was being charged by Uncle Sugar of fraud. I hadn't thought the ramifications through.

Grain prices have broken sharply lower the last few days, and the reason given is the effect of the Goldman Sachs charges on the market. It is alleged that Goldman Sucks, as one commentator is now calling the company, offered billions of dollars of financial instruments based on bundled bank loans that were shaky. The fraud would be if they knew they were shaky.

"What effect does this have on grain?" is the common view, but these things are all wrapped together when you start thinking about them. I am struggling to understand some of the connections. I know some financial instruments are traded on the Chicago Board of Trade, with the Board being the regulator. There is talk that the government needs to take more control of financial trading regulations, so this could lead to negative feelings in Chicago which bleed over into the grain pits.

Then there is the fact that losses by investors in one camp can draw money out of their speculations in Chicago. Then, the Goldman problem contributed to lower stock prices at the same time that crude oil was slipping lower. These days there is a direct link between crude and corn because a major use of corn is to make ethanol. Ethanol prices are dominated by the value of the gasoline it is blended into, and that is based on the value of crude.

So, the banking problems of the last two years are a drain on your pocketbook that just keeps giving. If you are not subsidizing bailouts with your taxes, you are suffering losses in your grain prices. Who knew?

Corn prices were firming up on the Board through last week. We gained 5-1/2 cents in the may contract on Wednesday and 5-1/4 on Thursday. We held on to the gains with a fractional gain Friday. It was over the weekend that the Goldman talk began to dominate. The overnight session going into Monday was down nearly 6 cents, and it got worse from the day session open. We ended up down over 16 cents, to below 3.48 May futures. Even the overnight three-cent bounce does not take the bite out of that drop.

Maybe bad timing added to the losses. The market was focused Monday on the apparent fast pace of corn planting. Traders were guessing that 19 percent of the crop had been planted. After the close the report came in at exactly 19 percent, an accuracy that is interesting. The market has been giving a little support to corn on the thought that we had been wet and might have a delayed planting season. That has all gone out of the market now, and we will stay defensive until the weather changes.

The soybeans have fought off the negativity in the corn markets with fundamental news that is supporting prices. Brazil has taken off 89 percent of its crop, but the farmers there are holding off the selling. They normally rush to market to beat the high cost of storing against rising inflation. This year they are lagging, and that is helping our exports remain on record pace, above USDA projections. IN the process, May soybean futures made a new recent high on Friday at 9.89-3/4, above the February 23^rd high of 9.85, and the highest price since January.

Wheat futures had also been rallying for two weeks, but the last two days have been ugly, as in corn. The May contract lost 24 cents from the Friday high to the Monday low, and is now trading at 4.7475.

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

Weather volatile, market stagnant

Here on our corner of the North Coast we always say, if you don't like the weather, stick around a few minutes. I remembered this as I was mowing lawn and tilling my garden last night. I have never done this in early April. I have frequently not done this until May. Yet, it snowed off and on for several hours Saturday!

Farmers have planted oats in the last few days, and one Hiram farmer has planted corn. His neighbor dropped a dime on him, and I won't mention Jack's full name in case he ends up replanting and gets embarrassed! Still, there is this feeling of a really early spring, and the thought that Jack is right.

I had a maple tree in emerging from bud two weeks ago. The Northern Spy beside my desk window is leafing out. Usually this happens the first week of May, sometimes later. The grape growers are freaking out that we will get a big freeze now that they have grapes emerging from winter too early.

All this and USDA has marked spring with a Planting Intentions Report that is frankly confusing. In the nearly two weeks since its release we have seen corn prices decline and soybean prices make small gains.

Part of the confusion in the corn is that there was no surprise. USDA says we will plant 88.8 million acres of corn, which is up three percent from last year. That could be thought to be negative to prices, but it was already in the market. The traders expected the increase, supposedly. Much of the increase comes from what we have been talking about, which is the wheat that did not get planted. The wheat acres are going to corn in a big way in states like Illinois, Kansas, Missouri and Ohio.

Soybean acres will gain less than one percent to 78.1 million acres. But, add that to the corn and we have the highest acres on record for spring planting. So, maybe those numbers are scary even if we were expecting them.

Aside from the wheat acres moving to corn, the market has focused on the wet spring. As I was discussing this with a farmer yesterday, maybe this factor got too much attention early. Maybe the biggest reason for weak corn prices is not the acres we expected, but the better weather we did not. All of a sudden tractors are running everywhere and delayed planting is off the Board thinking right now.

So, if we are getting a good start to spring and we are planting almost 89 million acres, maybe the market is right. Ahead of the report I feared that if the market did not digest the numbers well, we did not yet know what really cheap corn was. After the report we made a new recent low, dropping nearly eight cents after the report, to 3.43-1/4 May futures. That is bad, but it is not a free-fall. We have traded near that low six days now, but with an interesting two-day excursion into market madness. That would be last Wednesday and Thursday when we gained a dime the first day, then gave back eight and a quarter cents the next day. This is the kind of confusion thrill I could do without.

So, corn is bouncing on the low, but the soybeans still have an uptrend in place. The uptrend is measured by charting the cycle lows. We had 9.11 May soybean futures on February 4^th, then 921-3/4 on march 15^th, and finally 9.30-1/2 on March 31^st, after the report. We are now trading at 9.58. The small increase in soybean numbers may have surprised a market that thought the wheat acres would more evenly be split in the corn and beans instead of mostly going to corn.

So much for thinking the high corn production costs would favor beans.

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