Market Monitor

By Marlin Clark

Tales from the tractor seat

Back in the dark ages, in the early 70's, the government in its wisdom decided to make Memorial Day come as a Monday, regardless of the calendar, in order to make a three-day weekend for the working class. The first year it came early, and we were still trying to plant on Friday as the holiday was starting.

I had made a 40-foot spray rig that mounted onto my 930 Case Comfort King. It had front and rear tanks, and the outer booms were removable so the same rig could be used for spraying while planting.

I finished spraying a field on U.S. Rt. 6 in Cherry Valley and parked the tractor at the driveway with the booms still out. We were moving to another farm ten miles away, and I was in a hurry. The plan was to get a ride back to the tractor with a neighbor who was helping me until his pager called him to his trucking job. Then, I forgot about it.

I remembered it at 4:30 the next morning when Dad called me. The neighbor across the road from where the tractor had been could hear it running in the field, in the dark. I threw on clothes, rushed to the farm, and saw what was left of it come to a stop against a power pole.

Sometime in the night a vandal shorted the hot battery lead to the solenoid wire and started it. He put it in fifth gear, which was over ten MPH with balloon tires, pulled the throttle down, and jumped off. The next hour or so, as near as we could reconstruct, must have been amazing.

There were two-foot deep ditches on both sides of the road. The telephone cable was on the south side, the power poles on the north. The tractor jumped the ditch into the neighbor's field and started making circles. The wheels jammed to the left, so each circle took it across both ditches to the north, then back across both ditches to the south. Each time it crossed a ditch it did a wheeley, hit the rear tank frame, and slammed back down.

On one pass it broke off a telephone pole. On a subsequent pass it snagged the phone cable on the boom and carried it back across the road. There it wrapped it around a power pole. Eventually there were50 wraps of cable around the pole, representing 25 trips with the cable. The wraps worked to the bottom, so eventually strain pulled the pole from the ground. It fell on the steering column. The hand throttle was bent past the detent that shut the fuel off, so the tractor stopped.

The tractor was a mess. At one point the radiator was holed, and the resultant overheating cracked head. Every piece of sheet metal was mashed. The steering column and seat were broken off. The spray boom was twisted. And, the tractor had kept running until the fuel was shut off. In the process, seven telephone poles were broken from the strain, and a quarter mile of power line was replaced.

There was good news and funny news, if you twisted your mouth just right. On a U.S. highway in the middle of the night, no one came along for all this time to run into the telephone cable. And, a half mile down the road, Terry Mills was awakened by a strange ringing of his phone. In the days when they were hard wired, his had been pulled off his table, up the wall, and was trying to leave the house through the wire hold in the wall near the ceiling!

I rebuilt the tractor over the next winter, and it went on to log over 8000 hours before I sold it. Memorial day is still on Monday, and I still remember, not the troops, but my tractor.

Oh yeah, for those of you who thought you would be reading about grain prices, I will tell you what I told a farmer this morning—I don't know what is going to happen to prices. Overnight we are down a nickel on corn and a dime or more on beans. The beans are now back to the February lows, after being nearly a buck higher. The corn had rallied, but is now in the middle of the recent range, at 3.65 July futures.

The outside markets continue to dominate, making actual grain news irrelevant. The Dow was down 126 yesterday, the European financial mess continues, and our resultant rising dollar is hurting soybean exports. We now question if we will make the USDA export projections for the 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

Report bounce goes away

When USDA released their monthly Crop Production and Supply and Demand Reports Tuesday May 11^th, the market saw glimmers of hope amongst the nuggets of news. The shiny spots now appear to be fools gold.

Markets spurted higher coming out of reports last Tuesday, but reality struck later in the week and we are now looking at a new recent low in soybean markets and a return to the low in the corn. Soybean prices bounced 35 cents and the corn jumped almost 15, and then it was over and prices were lower than ever.

Look at the charts. July soybean futures on the CBoT had a low at 9.39-1/4 the end of March. They rallied over 80 cents to the 10.20 high of April 26^th. Then, they lost 82-1/2 cents by Monday. In the middle of that was the short-lived 35-cent jump in the two days after the reports. We are now back to the prices of middle March.

In similar fashion, July corn futures had a 3.51 April 27^th low, bounced to 3.85 on May 12^th, then dropped to 3.55-1/2 by the 17^th, Monday. That recent 3.51-1/2 low needs to hold, or we could hunt for the old low of 3.33-3/4 put in on September 8^th, the harvest low.

Report reactions are always difficult to predict. Maybe there is good news, but maybe it is not good enough. Maybe it is "already in the market." That is the usual saw we quote when prices don't react according to the news we see.

In this case, it may simply be that the news was not good enough to overcome "outside markets," the other phrase we shove in there to explain what may be beyond reason.

This week, the outside markets were notable. Biggest news world-wide was the bailout by the International Monetary Fund, which mostly means by money borrowed by the US and funneled through the IMF, of Greece. That country was facing riots brought about directly by austerity measures pressed by the government on the people. Indirectly they were a result of overwhelming debt that is crushing the economy.

Since Greece is part of the EUC, and uses the EURO for currency, the problems end up weakening the EURO, especially since all the news talk has focused interest on several other countries with high debt loads. Now, all of a sudden, the world currency to be respected is the US dollar. After several years of China and oil-rich countries in the Persian Gulf pushing to use the EURO to replace the dollar as the trading standard, that idea does not look so great. The European economy is no better than the US economy. The dollar looks pretty good again.

Of course, if your business depends upon a large part of your crops being exported to other countries, a stronger dollar is not good in the short run. Soybeans are now more expensive this week in Rotterdam, expressed in EUROs, than they were last week. That is to say, they are now worth less expressed in dollars here.

And, less we feel smug about our dollar looking good again, look at the foreign debt in perspective. They now have debt equal to 1.25 times their gross national product. We are approaching debt equal to the GNP, and projects of the course we are now on is that we could also hit the 1.25 mark in five years. Then, the strong dollar will not be a consideration, or will it be our biggest problem.

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

Fast planting weather, slow market

Since this is the first week of May, it should not surprise any market watchers that weather dominates trading views of the grain markets. It has always been this way, and always will.

What has changed is the view of the weather. A month ago the market was talking about wet weather that would potentially slow the start of planting. Traders built a little delayed-planting premium into prices. The weather changed dramatically, and so did the markets. Large volatility has characterized recent prices as traders reversed themselves on the weather and now are focused on a record pace of planting.

Monday after the close of trading USDA released the weekly Crop Progress Report. It was no surprise that fast planting continues, although we did not expect that this time last week. At that time we had four or five days of rain forecast for the region. In fact, the rains were light and spotty. Some field that were worked in Northern Ohio looked a little juicy, but they were worked. In other places the dust flew.

As we drove into Jamestown, PA last night my wife watched a planter turning in a cloud of dust and asked who was farming there. I told her who had been working that ground, but that I couldn't tell if it was them because there was too much dust!

Dust, in Northeast Ohio, in early May. Since farmers, and psychologically I am one, can always find the dark lining in the cloud, we can now start worrying about a hot, dry year! Coffee shop talk would be that this is starting out like 1988, except that it is faster than 1988, and the coffee shops don't have any farmers in them right now. The coffee is coming out of thermoses tucked in the corner of the cab or carried to the field for tallgate suppers.

How fast are we? USDA reported Monday afternoon that the US was 68 percent planted, breaking the 2004 record for the week of 63 percent. The market that year was not thinking of drought, but of early planting promoting record yields. That did happen, with over 160 bpa for the country. Ohio is at 64 percent, planted as of Sunday night, which means we gained 19 points in a week and the US gained 18 percent. Last year Ohio was only 12 percent and the nation was 32 at this time. The average for Ohio this week is 35, with the US normally at 40.

So, markets are defensive, with corn down over a nickel at one point Monday, finishing down almost three cents. Overnight we are down another 2-1/2, and there is no other reason. The fear of a another record crop will undercut the corn until something fundamental changes.

And, of course, record corn planting pace results in fast planting of the soybeans. This is the first week for USDA to report bean planting, and the numbers are impressive. The US is 15 percent done, compared with five percent last year and an average of eight percent. Ohio is ahead of that, with the beans 23 percent planted. Last year this time we had only just started, at three percent. The five-year average is 12 percent. I am having a geezer moment, remembering when we planted corn anytime we felt like it, mostly in the last half of May. We thought early June was fine for beans. We thought the frosts would kill the beans, but now we plant beans before corn sometimes and expect them to shake off the frost and thrive.

I also remember those tailgate parties in the field, with big pots of soup and chili and sandwiches and slabs of pie and three little kids running around, excited to see Daddy. I got to see one of them work college summers on a big farm, and that memory is bittersweet. "if you had kept farming," he told me, " I am the one who would have farmed with you."

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