The markets finished on a high note Friday as corn and soybean prices exploded to end the week. March soybean futures traded 19 cents higher, and March corn futures traded hit $5.62. The positive price action followed Thursday when corn and soybean futures tumbled.
“I think the market is probably range bound right now,” said Bob Utterback of Utterback Marketing during the virtual U.S. Farm Report Commodity Classic taping this week. “But the market can’t really correct that much, because it wants to make sure the corn acres and bean acres get planted. But we could have a period of time here where the market is searching for fundamentals, and that could be slightly bearish.”
Utterback said if the bearish sentiments take hold, he doesn’t think it will last long, which cold be a signal for feed buyers.
Chip Nellinger of Blue Reef Agri-Marketing also thinks it will be hard to tame the bullish action in the market in the near-term.
“I don’t know that you see the death of the bull right now,” said Nellinger. “I think if the death of the bull comes, it’s going to be a June or July timeframe, after we’ve planted a lot of acres and are into a good growing season. I don’t think that you can just kill this thing off and go immediately lower.”
Just because Nellinger thinks the market momentum will hang around longer, doesn’t mean the market is immune to sharp market moves lower on any given day. He says this week was proof of that.
“That doesn’t mean you can’t have sharp corrections,” added Nellinger. “But to kill the bull, I think that comes June, July at a minimum. And that is only if we’ve gone high enough to kill demand and have big crops here.”
Nellinger says the one factor he is concerned about is the demand assumptions that were produced during USDA’s February Ag Outlook Forum.
“They have the demand assumptions so high right now, I’m fearful that as you get a few months down the road, we’re not hitting those, we have to pare the demand assumptions back, that’s going to increase the potential carry out,” he added. “That is one thing that’s on my radar screen.”
Farm Journal economist and AgriTalk host Chip Flory said the other piece that could drag down the positive demand story is the African Swine Fever (ASF) situation in China.
“The thing that concerns me the most, is when we look at those demand numbers that Chip was talking about, and you look at how much we were relying on export demand from China, there are problems with African swine fever,” said Flory. “I think it’s worse that what they’re letting on. And they’re having a devil of a time trying to get that disease under control in that country.”
