Mark's Market Talk

We saw another volatile grain trade last week. It has become the norm for grain to move 20 to 60 cents in a week’s time, sometimes we are seeing this happen during a single day. Last week we saw a strong move higher helped by a weather forecast that changed to hotter and dryer Thursday night. For the week July corn was 24 cents higher while Dec corn was 45 cents higher. Earlier in the week it appeared we had peaked out and perhaps the rally was out of gas. Then Friday comes along, and corn became a follower of spring wheat and soybeans. July Minneapolis wheat shot up 35 cents Friday as the weather is challenging the spring wheat acres. The thought is if the northern plains is suffering the beans planted there will suffer too so beans were 30 plus higher Friday. Corn went along for the ride as the traders got caught up in the frenzy. Corn basis levels have remained strong during this rally as the domestic demand has been competing with the export trade. It was feared China would cancel a lot of old crop corn and replace it with cheaper new crop. However, for now they are holding the course and taking shipments. That means they either need the corn bad, or they see prices going higher in the year to come. Maybe a little of both. Beans also finished last week on a higher note. July beans were 52 cents higher while Nov was 61 higher. Again, it was all about the weather and the continuing drought not only in the northern plains, but also the west side of the corn belt. Chances are we will lose this crop 3 or 4 times before harvest. With stocks already on the tight side any weather hiccup will add to the volatility. We talk about feeding a rally and that is hard to do when the market is higher almost every day. But the time will come, it always has, when this bubble will break or at least gets distorted. That is when you will be glad you made some sales on the way up.