Weekly Market Update – March 14, 2019

Monday felt like more of the same pain we have suffered the last few weeks as both corn and wheat put in new lows and soybeans struggled to do anything. However, the blues that came on Monday were erased as we saw a very large move higher on turn-around Tuesday. Corn and wheat were able to hold on Wednesday and though wheat closed lower, it did not give up all of Tuesdays gains and was able to resume the uptrend on Thursday. The fund selling has been relentless and disheartening to everyone on the farmer side of the market. Looking at the commitment of trader reports, we can see the funds are building near record shorts in both corn and wheat. This move has been so surprising because all the fundamental news looks positive but yet the funds continued to sell and push the market lower. This should set us up for a very exciting spring as almost the entire country has been experiencing far from optimal weather for the last 9 months. We are not the only ones who have spent the winter sopping wet. We are a long way from having a planting delay in the Midwest, but the weather has not made anything easy so far. With the inability to do fieldwork in the fall, as is common in the Midwest, there is going to be a lot to get done in a short window.

None of the acreage surveys have come up with corn acres much above 92 million acres. Last year we planted close to 90 million acres and made a record yield and still have reduced the carryout by over 300 million bushels. And that is WITHOUT China buying anything. That is WITHOUT increasing ethanol blend from 10 to 15% as has been rumored. Despite corn spending the entire winter sleeping just to wake up in the spring and be punted by the funds, we are still facing a tightening balance sheet going into a very uncertain growing season. I feel like a broken record because I have been writing and saying this all winter but the fundamentals are and remain very friendly to corn. And if we get lucky and get just one of the possible gifts mentioned a deal with China, a planting delay, e-15 ethanol, it will add fuel to the fire with the funds carrying a near record short.

All that being said, we recommend leaving the orders working for new crop above $4. Those should be profitable levels and we need to have the discipline to book profit when opportunities present themselves no matter how bullish we get. We elect to leave soybeans orders working at $10. Nothing has changed on their fundamentals either. We still have too many beans in the world whether or not we get a deal done with China. If you are the last person left with wheat hedges on, now is an even better time to take profit. Cotton needs a deal with China and when it comes, we could easily see a move toward 80 cents for new crop. Be patient on cotton as well.