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Market whispers for the bull case for corn
Market whispers might once again be occurring, not just for grains but for
perhaps the entire world's marketplace! Are you listening?
There has been much fretting over the financial markets recently in the US and
World, with the financials getting much of the attention due to the fluttering
of the market at the least little bit of news. Last Friday worries were that
the market would crash as it had in 1929, with some citing the anniversary of
that disaster as the potential start of the "Depression" of the 2000's.
there was basically much ado about nothing! The Dow didn't decline, and in fact
gained 1000 points yesterday (a record!) and has had lots of trouble declining
below the 8400 area. If anything, US stocks rallied and held up world stock
values, which recently seem to be coming under more pressure than US stocks as
overnight trade has been weaker than US day trade! Could it be we are in the
process of bottoming the stock market at 8400, it just will take a while (6
months) to complete that bottom???. The market is well aware that the world is
entering a recession, but perhaps that is already built into the market?
world also knows banks are in a heap of trouble, and already have been
discounted well below their 'full value'. But maybe bank stock prices have
bottomed, too, as in fact, banks are using the money the government has infused
into their system to acquire other banks - not lend money - much to the chagrin
of the Bush administration who so passionately pleaded with Congress for our
bailout program for banks. It might also be true that housing values are at or
very near a bottom as well, as housing data continues to improve in each report.
With the FED and US government policy so astutely concerned about housing,
banks, and US stability, is the market whispering: 1) The US stock market is
bottoming, and will lead the world stock market higher, and 2) US housing and
bank stocks are the best buys on the planet today?
If the stock market has bottomed along with housing and bank stock values,
perhaps grain markets aren't far behind? The USDA yesterday revised corn
planted/harvested acreage down 1 million acres yesterday. While corn yields so
far during harvest are outstanding, and could more than offset the 1.4%
production cut in yesterday's highly unusual report 'correction', we still have
a huge amount of corn left to harvest. We only have 39% of corn harvested vs.
66% normal and 70% last year at this time, and the corn is very wet to date and
is not drying as quickly as we'd like. Many western corn belt states are
extremely wet, with some not able to support combines in the field. This
scenario could become a nightmare if western areas receive heavy snow in the
near future, and yesterday's 6-14 day forecast shows wetter than normal
conditions and cold weather coming in behind the current warm temps. Could it
be that in mid-November, we might sock in 30% of the corn crop in western corn
Monday's corn market formed an upside daily reversal, followed by sharply higher
trade Monday night. Weekly charts indicate a potential weekly upside reversal
in corn, too, if we trade higher the rest of the week. While wheat/soybeans
faded from Monday's overnight gains, corn maintained them throughout Tuesday's
trading day. South American soybean planters are getting disgusted with high
input costs and relatively low soybean prices, so perhaps they will plant much
less extra acres than the world thinks today? Could that increase the bid for
soybean acres in the US, thus lowering corn acres? If fertilizer dealers don't
back off their ridiculous high prices, perhaps US farmers will shy even further
away from 2009 corn? We note that while NH3 sellers claim they will not lower
NH3 below $1100, urea offers are now down to $450/ton, which means NH3 is worth
$800 or less! Why would anyone buy NH3 for more than $800??? Pro Ag could
build a case that in spite of 160 bu/acre corn in 2008 (based on better than
expected harvest yields), that corn could still be a bull market in 2009.
Potential market whispers: 1) Corn is the real bull market in grains in spite
of record/near record large 2008 yields, and 2) Grain prices are getting cheap
considering the inflationary US monetary and fiscal policy.
Right now these are market whispers and could all be dead wrong. But we need to
pay attention to these whispers, before they become a roar!
The information contained, while not guaranteed as to accuracy or
completeness, has been obtained from sources we believe to be reliable. The
opinions and recommendations contained are based on our judgement and do not
guarantee profits will be achieved or that losses will not be incurred.
Recommendations should not be construed as an offer to buy or sell
commodities. There is substantial risk of loss in trading futures and
options on futures.
Ray Grabanski is President of Progressive Ag, a marketing and risk
management firm for farmers located in Fargo, ND. For questions or
comments, or if you are interested in more information about Progressive Ag's
common sense marketing services, call 1-800-450-1404 or email
Market whispers might once again be occurring, not just for grains but for perhaps the entire world's marketplace! Are you listening?