Mar 04, 2022
WOW! What else is there to say after this week? Volatility was off the charts, corn spreads went insane, cash grain movement was huge. The only thing that is making perfect sense in this market is the inverted relationship between futures and basis. One of the basic rules of economics is beginning to show: an increase in price will result in a decrease in demand (high prices cure high prices). The futures aren't always a true reflection of the market and investor/spec/fund money have driven up the board to the point of upsetting the cash grain trade and completely thrown off the demand curve for corn. End users and processors gained about two months of coverage (March and April) in the first few days this week and simply do not need to compete for corn in the near future (rolled bids to July and widened basis). They have no immediate needs and are already looking into the summer months. It's going to take some time and a big wind down in volatility to see an improvement in cash. The USDA confirmed 3 soybeans sales all for the 2021/22 marketing year this morning that included: 106,000 tonnes to China, 108,860 tonnes to Mexico, and 125,000 tonnes to unknown. That's an approximate total of 12.5 million bushels. Along with South American crop production questions and a suddenly non-existent Ukrainian export market, the USDA will throw another monkey wrench at the market next week with the March WASDE report on Wednesday. Enjoy the weekend, everyone.
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