Corn: March corn settled down 11 ¾ cents at 7.10 ¾ which is the lowest settlement in one month. New crop CZ fell 11 cents to a 7-month low and low settlement at $5.66 ½. If you’re keeping track, CH has dropped 36 cents since Feb 1st, while CZ has dropped 31 cents. CZ’s low today at 5.65 ¼ is almost EXACTLY $1.00 off the contract high at $6.65. This represents a 15% loss in value over 5-months. Tomorrow we will get February world crop production and U.S. and worldwide supply and demand report. The average analyst estimate for US carry out is .615 billion bushel. This compares to January’s number at .602, which pencils out to a 12 million bushel increase in the carry out. Possibly more important, we will get an update on the expected production from South America. Hedgers: The USDA report is released at 11 AM CST tomorrow. The clock is ticking.
Wheat: March wheat settled down 5 ½ cents at $7.56. New crop WN settled down 8 ¾ cents at $7.63 ½ which was a 1-month low settlement. WN posted a one month low yesterday, however, down at $7.58 ¼. That should be key support for the contract tomorrow. Followed by the 7-month low posted last report day, down at 7.52 ¼. The average analyst estimate for tomorrow is a carry out of .728 billion bushels. This also would be an increase of 12 million bushels from the January figure at .716 billion bushels. All in all, wheat held up pretty well today, most likely because spreaders were selling corn and then buying wheat against those sales. We will also have updated world supply numbers. Farmers have to remember, that while our crop conditions are some of the worst on record, someone somewhere is harvesting wheat around the world, every month of the year. A case in point would be India who quietly has been having a great growing year for their wheat. Very often price trumps quality issues when a nation is pricing food for its people or for its livestock herds. Hedgers: The USDA report is released at 11AM CST tomorrow. Plan accordingly.
Soybeans: March settled down ¾ of a cent at $14.86 ¾. SX settled down 12 cents, at $13.24. SH held in tough through a 19 cent trading range. Once again, however, the $15.00 print remained elusive, with today’s high tick at $14.97. For the past 4 sessions, SH repeatedly failed to test $15.00. For the past 3 months, this has been the wall of resistance, while the support has remained steadfast down at $13.55. When the break out from this $1.50 range finally comes; it should be impressive. Over the past 4 days, SH has held tough, while SX tested $13.50, only to quickly retreat 30 cents. This spread action suggests the speculative traders have been actively buying old crop beans and selling new crop against those buys. The average estimate for tomorrow is for a carry out of .129 billion bushels. This compares to January’s figure at .135 billion, suggesting a 7 million bushel drop in carryout, and therefore continued tightness. Hedgers: The USDA report will be released at 11 AM CST. Plan accordingly.
If you have managed your risk over the past several months, a limit move higher or lower should not shake you too badly. However, if you have not, you might not sleep too well tonight. Will CZ continue to melt lower? Or will CZ stop the bleeding and rally back so that every farmer who DID NOT sell $6.50 corn last time we were there gets a second chance? Honestly, no one really knows. As a business person, you should be managing your business risk. Come harvest, there will only be one number that matters, and that’s your price per bushel.
Opinions are great. But you can’t use your opinions as legal tender.