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Sideways trading continued this week. Corn traded between $6.75 and $6.80 every day this week, while beans finished the week at the upper end of its recent month long $15.00 to $15.40 range.
War & Weather
Last month 30% fewer ships were loaded out of Ukraine than in the previous month. Then on Friday tensions increased with more missile strikes hitting critical infrastructure. The increased potential risk of getting the grain out of the region contributed to the rally on Friday. Questions still remain regarding how much grain will be raised there in 2023.
Weather conditions in Argentina suggest their corn crop’s yield may be lower than where the market has priced it in at. Plus, the planting pace of Brazil’s Mato Grosso region, where nearly 50% of their second corn crop is grown, is slightly behind the 5-year average. A late planted crop there could be impacted by the May dry season and potentially reduce yields. The market will continue monitoring the situation there closely over the next few weeks.
New Crop
Crop insurance prices are set by the average closing price of December futures in February. After 8 of the 23 trading days of the month, it looks like corn is averaging about $5.95.
Over the last 33 years, the calendar high or low of December corn has never been made in February. And over the last 23 years, the calendar high or low for the year has never been in March either.
In those same 33 years, January has only had December corn’s calendar high twice (2001 and 2013) and its low three times (1995, 2011, and 2021). Currently, January has recorded both the high of the calendar year at $6.11 on January 3rd and its low of $5.84 on January 23rd. History would suggest there is almost a 90% chance neither of these two numbers will end up being the high or the low for the year.
Bottomline
Usually, February is not an exciting month for the markets. Market participants are waiting and watching for the next few months to see what happens with the war in Ukraine and weather in the southern hemisphere, because both can change prices substantially. It could mean the market will continue trading sideways for the next few weeks until more is known.
Want to read more by Jon Scheve? Check out recent articles:
USDA Cattle Numbers Suggest Upside Potential In Corn For Feed Demand
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Reasons For Soybeans To Rally Or Drop Moving Into 2023
Reasons For Corn To Rally Or Drop Moving Into 2023
Jon Scheve
Superior Feed Ingredients, LLC
