Mark's Market Talk

Feb 08, 2021

So, what should a guy do now? The rally in the grain markets is acting top heavy after trending higher for several months. March corn finally closed above 5.50 a day or two last week but ended the week at 4.485. for the week March corn was up 2 cents while Dec corn was almost 7 cents higher. It took us a long time to get to this point and the next resistance level is in the 6.00 range. However, we find ourselves at a crossroads as we look at where the corn market may go from here. The bulls will point to the huge exports sales we have had and say we still have the cheapest and largest supply of corn in the world. The bears may talk about the logistics of getting all the grain we have sold shipped in a timely fashion. That brings up a good point. We have a great infrastructure in this country for moving grain rapidly, but with the volume we have on the books we cannot afford any hiccups in the system. That would include late river openings, a low water summer, or lock issues. A big help is the port system that has been developed in the Pacific Northwest. A lot of grain is now being shipped from this area. It has provided a rail market for the northern plains’ states, and it gives the US a great companion to the gulf ports. The dredging of the southern Mississippi river is very important as once it is completed the mega ships will be able to load 25% more grain. That will reduce the shipping costs on the grain, like how 7 axle trucks have reduced shipping costs in Iowa. Another immediate market mover could be this weeks USDA stocks reports. The trade expects the carry outs for corn and beans to be reduced. A lot of this is already built into the market so the risk with this report would be they move the other numbers around and do not lower the carry outs as much as expected. The bean trade is especially focused on this number. The past week March beans closed down 3 cents while Nov beans were up 18 cents. That shows the trade is concerned the old crop market has matured, while they also see a need for higher new crop beans to draw the 6 to 8 million acres they need to steal from other crops. Local new crop bids are back in the 11.00 range which is profitable for producers and would be a good starting point to price. We have heard the past 3 months that the South America crop has been hurt from dry weather. Now that harvest has started it sounds like if the current wet weather will let them get the beans harvested the yields appear to be better than expected. This could start to take the wind out of our bean prices, especially old crop. Once the expected acre war is done in this country the trade will turn its attention to our weather and we start all over again. As farmers there are two things we cannot control, weather and markets. However, we can use pricing opportunities to lesson the impact of the latter. We should never fear locking in a profit.