In a recent report, the National Oceanic and Atmospheric Administration (NOAA) classifies La Nina as "mature" and predicts it will likely weaken through the remainder of winter and dissipate during spring.
With this situation, NOAA reports an increased chance of above-average temperatures across the south-central and southeastern U.S. and below-average temperatures in the northwestern U.S. Also, above-average precipitation is favored across most of the northern tier of states (except the north-central U.S.) and drier-than-average conditions are more likely across the southern tier of the U.S."
Jerry Gulke, president of the Gulke Group, says these consistent drier- and warmer-than forecasts have caught the eye of traders. "The market is trying to focus on weather and what could be coming."
He says the non-normal weather conditions and unset insurance premiums are keeping farmers up-in-the-air about their final acreage mixes. Both of USDA’s Crop Production and Prospective Plantings reports that issue next month will help to answer some of those questions.
"I think we buy time here and let the market trade itself and see how much higher it can go until we have a fundamental change."
Listen to Gulke's market audio analysis:
A Quick Market Recap
Corn, soybeans and wheat all ended the week higher. Gulke says since the Jan. 12 reports, all three commodities have had a rough go. Visit AgWeb's Market Center.
"Corn and wheat are still struggling, but they are gaining ground," he says. "Wheat has made an attempt to break the long-term downtrend and has made some respectable recovery."
Soybeans closed in the high range of the week and are looking good technically, Gulke says. "We have probably seen the worst for soybeans prices. The market is looking at less global supply, due to the deteriorating crop in South America, which should keep a firm price for the U.S. crop."
He says beans are the only one of the three that has been significantly higher than the pre-January prices.