Three commodities, three trends


Last week continued the trend of market analysts struggling to write about commodity price movement. Again, we saw dribbles of news and price moves that sometimes made little sense. Take Chicago wheat futures, for example.

March futures were down 57 cents, and nobody had a good explanation why. There was no news to justify the crash.

Meanwhile, corn futures were down 28 cents on the old crop, the worst drop in seven months. New crop December futures lost almost 20 cents.


Soybean futures were different, however. They gapped higher after frost in Argentina and more rain there. Then, the beans lost the gains and finished the week 3 cents lower on the old crop, and more than 12 cents on the new crop.

What can we rationalize after the fact for explanations for these moves? In my humble view, wheat should have some support by the fact that we are suspicious about what the Plains crop is going to be.

Early last winter there was talk about how the crop went into ground so dry that this spring we might discover that it never germinated. Analysts were talking about large acres of abandonment, acerbated by the thought that abandonment would come easily in areas where corn and soybeans could be substituted, simply because wheat was so cheap compared to other crops. But, price drops would argue against these possible fundamentals.

Maybe we just need to see these ideas supported by actual abandonment and planting before we see better prices.

For all the early talk, the market does not seem to now believe in lower production. Adding to the idea of low production was the thought that spring wheat might not be planted simply because of price.

There is some thought that this is going to happen, as farmer talk right now supports the idea that the upper Plains, where spring wheat is the normal crop, is poised to plant more soybeans.


The real news for the week was the release of the Feb. 23 USDA Outlook Forum reports. Actual hard numbers came out of this meeting for the first time this year. Trouble was, there was little positive reaction from them.

The forum now predicts that U.S. farmers will plant 91 million acres of corn. That was just a tick above the pre-report estimates by traders of 89.9 million acres, and a good bit above last year’s actual planted acres of 88.6 million.

The forum predicted soybean plantings at 87.5 million acres, the same as we actually planted last year. The trade was looking for 88.6 million acres, maybe just because soybean prices are historically high.

It should be noted that these early acreage numbers have a strong historical tendency to be higher than what is actually planted.

USDA, at this point, is looking for slightly higher yields than we had last year. This is easy to predict in February before any kind of spring weather. This time of year we always bet on good crops, and good crops means a continuation of the higher yield trend that we have had all my long life.


The prediction is for a record 181.5 bpa corn yield and a 52 bpa soybean yield. We had 179.7 corn and 49.5 soybeans last year. The market expected a corn yield two bpa lower and a bean yield just a half-bushel lower. None of these numbers are market movers, as we will wait for the March 30 USDA Planting Intentions Report for more-tradable numbers. That is, numbers the market historically has more faith in.

The scary thing about corn prices is that we are pounding on a long-term low of 6.35 from Dec. 7. We have lost a further 11 cents Feb. 27 and so far Feb. 28, as this is written, and are now trading 6.39.

We have been as low as 6.36 1/4, Feb. 28.

After this week, we will be talking about May as our lead month futures.

Soybeans are not trading down to recent lows, but are getting in the neighborhood of the 14.78 1/4 we traded back on Jan. 25 . Feb. 28 we are trading 14.96 1/4 with a low a little while ago of 14.93 1/2. In other words, corn and soybeans are both a long way off the recent highs, but soybeans have been relatively higher in recent weeks.

The Chicago wheat futures, which had the horrible loss last week, added to the loss Feb. 27 by another 12 cents. This morning it is turning a little, however, we are up almost 2 cents at 6.94 1/4.

It is hard to get excited about this small gain, since we were almost a dollar higher less than two weeks ago. On Feb. 14, we traded 7.92 1/2, and it seems a lifetime ago. How is it possible we are now a dollar lower than we were when the Ukraine War started. Then we thought that was a big deal and shot prices into the teens. Now we expect no exports out of Ukraine this year, partly because of production issues in the middle of a war, and partly because we expect the safe passage agreement that allows shipping out of the Black Sea to expire shortly.


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