4/16/18: Mark's "Market Talk" Blog

We are at the start of the corn planting season but there has been very few acres planted as the cold weather keeps hanging on. Ground temperatures have had trouble getting into the 40’s let alone the 50’s. The forecast for this week doesn’t show the air temps getting out of the 50’s so it will be hard to bring the ground temps up to where we want them.

It may be too early to start talking delayed planting but if the conditions don’t begin to improve the level of concern will start to grow. The traders don’t seem willing to put any weather premium in yet. May corn ended last week down 3 cents making 2 weeks in a row that we have closed lower.

Farmer sales have been stronger the past month as a lot of people took advantage of the small rally we did have. Now we are facing stronger competition from Brazil as they have lowered their prices and now they have the cheapest corn in the world. We are slowly working our stocks down but it may take a planting delay to turn this market higher in the near term.

When you look at last week’s bean market you have to scratch your head a little. Early in the week there was an announcement that the US had sold beans to Argentina. At first I thought I had heard wrong but it was true and they announced a second sale later in the week. Of course they are struggling with a severely reduced bean crop and they need to source beans for their processing plants. But why buy from the US and not nearby Brazil?  

It appears the rest of the story may have something to do with the threat of tariffs. After the US and China started trading barbs Brazil got a little cocky and thinking they would be selling all of these beans to China they raised the basis at their gulfs to take advantage of the situation. This gave the United States a 65 cent advantage on the world market so not only did Argentina come buying so did China. Brazil has now realized their mistake and brought their prices down to where they are the cheapest in the world.

Even though beans were down 7 cents Friday they ended the week 20 higher. Now that we have put a double top in this market it will be tough to turn it higher again. The funds are still very long beans and they tend to protect their position as long as they can but we may be at the point that they will allow beans to work lower. However, some may compare this market to a cat with nine lives and it still has a couple of them left.

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