Jerry Gulke dissects market action in corn, wheat and soybeans since USDA's quarterly reports and concludes that the big swings that have been seen may not have been driven by the reports.
“Well, the market has seen big swings this week but in the end we saw a pleasant response to the reports,” Gulke says. “Corn got hit pretty bad because acreage wasn’t as low as people expected. The market overreacted but it as the last day of the month and the last day of the quarter so some of the trading probably was related to that and not the reports. The good news is, the lows held.”
Wheat took a pretty good hit with no valid reason, Gulke adds, especially given more and more reports of winter damage. “Traders figure wheat has nine lives but it sounds like some losses are real.”
“Soybeans were the most interesting crop this week in my view,” Gulke says. “The market was low going into the report, which turned out to not be bearish. Beans made what we call a key reversal higher—took out the lows back to October and then traders had to head for cover. Now they closed the week up 25 cents.” Gulke feels for now it’s a waiting game. “If it makes new lows, I would worry.”
He points out that investors have not liked commodities recently. From these levels, it could be and some speculators or money managers are thinking that the potential for losses is pretty low from here.
In fact, this week virtually every ag commodity that trades futures (exceptions being a 4.5 cent loss in corn and 3 cents in oats) was in the black -- some by big amounts.