Mark's Market Talk
Mar 01, 2021
Last week I commented that the grains were starting to feel a little top heavy. Some of this was due to the export demand shifting to South America as they are finally able to start ramping up their harvest. We have also not seen a Chinese grain purchase since they came back from holiday 10 days ago. However, the markets trended higher the first 3 days of the past week and appeared headed to new highs which we did on corn during last Wednesday’s overnight session. Then when the markets reopened Thursday morning everything broke loose and headed lower. The sell off continued Friday morning but late in the session corn and beans both recovered and ended the day only slightly lower. For the week May corn was 7 cents higher while Dec corn closed 11 higher. Beans fared even better as May closed 28 cents higher and Nov was almost 30 cents higher. We have seen this happen several times in the past couple of months. Liquidation starts in and then we reach a point where buyers step back in and stabilize the market. This volatility may continue in the weeks to come as weather both here and in South America will continue to grab headlines. Planting expectations for this spring will be hotly debated as corn and beans will both be looking for acres along with cotton. We have been going to southern Alabama in February for several years. This year I noticed that cotton was raised farther north in Missouri in 2020 than I remember in the past. From there clear to the Gulf, you will notice crop rotations change with the markets. You rarely see corn in southern Alabama, but in 2013 they planted a lot due to higher prices. After a hot and dry summer, they were remined why they do not plant corn there and now you see very little corn in the area as beans, wheat, and cotton are their primary crops. The northern plains may influence the markets some with their planting choices. Corn and beans now occupy a lot of acres that used to be primarily wheat. Now that we have developed the Northwest Pacific ports the plains farmers have a better market for their crops. The development of better short season bean varieties has allowed them to raise good yielding beans to the north. All these factors will influence our crop prices. The corn belt continues to raise the lion’s share of our corn and beans. The fringe area is getting bigger than it used to be and with their better yields they can impact our prices some. So, I come back to the same word to describe the markets in the near term, volatility. That is not all bad if you stay on the right side of things.