This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Grain markets were closed on Monday during the day session for Presidents Day. The market opened back up 8pm on Monday night. The weekly reports will be delayed by a day this week due to the holiday.
Buyers continue to show up in the corn market on price breaks. Exports, ethanol and feed demand all remain very strong. After selling off earlier in the week last week, March corn came back and made a new high on Friday at $4.9975. Last week’s high is yet another reminder to be careful working good till cancelled orders at round numbers. Anyone who had an order working at $5 vs March does not have a fill. Anyone who had their order working at $4.99 got filled on Friday. I think there is still a good chance we trade March through $5 before it goes off the board. If we do, those who put their orders at $5 even will be fine, but as we have all learned too many times there is no guarantee. In the world we are living in now, a tweet or a headline in the middle of the night can completely change the tone and direction of the market.
The grain and oilseed markets were led higher by wheat on Friday for a change. Wheat closed up 22 cents on the day with the march contract closing at $6 for the first time since october. Analysts and traders were looking for something to point to to explain the strength. Threat of winter kill in the Plains was widely cited as one catalyst. Once the market hit some technical levels and the funds started buying back their shorts, the wheat market gained some more momentum. I hope there is something else underlying the rally in addition to the weather threat in the Plains. Wheat is awful hard to kill in February.
Soybeans did their best to rally on Friday as well. They had dug a bigger hole earlier in the week when they sold off and have not come close to reaching new highs like corn. Truthfully it is a little amazing how much they were able to come back in the face of growing South American production. In addition to the USDA report last week that did little to feed the bulls, the weather patterns shifted significantly last week as well. The areas of Argentina that desperately needed rain started getting it and the areas of Brazil that needed a break in the rain to catch up on harvest got that too.
Funds had built a pretty big long position in the corn and had bought back their soybean shorts and were starting to build a long position in beans too. The last commitment of traders report we got on Friday showed they had sold a lot of corn and beans. It is good to see the market able to recover most of the losses after a fund flush of money.
We will continue to trade South American weather and headlines until we get the numbers from the USDA Outlook conference at the end of Feb and then the numbers on the Prospective Plantings and Stocks report on March 31st.