Today caps off a rough week after finishing a rough month for the ag markets. Corn futures were down 4.1%, soybeans down 2.1% and wheat lost 13% in the latter half of February. Washout in the wheat has contributed to the downside pressure in corn. Fund selling has been a major feature in both corn and wheat. US wheat is competitive in the world market on price but we have missed a couple big tenders in the last couple weeks to Russian and French wheat. Once the bloodbath commenced so near first notice day on the March contracts, we have struggled to find support in the midst of massive fund selling. As technical sell signals were hit and momentum increased we are still unable to find support.
Until now, the markets have been relatively calm and patient waiting on a deal with China. Tweets of great progress and announcements by members of the trade delegation of significant hurdles cleared have been enough. It seems the market has now lost its patience. We need meaningful, concrete progress. The fundamentals on corn, wheat and beans have not changed drastically over the last month. We still have the least amount of wheat planted in the US in over 100 years. Even with some revisions higher of the Russian crop estimates, we still show a world balance sheet that is tightening up. Last year this time, May corn closed at $3.82 compared to yesterday’s close of $3.70. Last year this time we had corn carryout projected at 2.14 billion bushels compared to USDA’s Outlook conference estimate last week of 1.65 for the upcoming crop year. Index funds have the smallest long corn position since March 2009 and spec funds are building a sizable short position. US soil conditions are saturated with either rain or snow and many analysts are estimating only 60 to 70% of fall fertilizer application was completed in the corn belt. With long term forecasts showing continued cold and wet it is going to be a very interesting spring in the Corn Belt. While corn has the fundamentals on its side, beans do not. We have to get a deal on beans. Promises by China to make additional purchases so far have not totaled what they would have been buying so the market is not taking much comfort from the recent announcements. We need a deal!