The corn market ended nearly even for the week, with soybean prices ended the week slightly lower. With President’s Day on Monday, the grain markets face a three-day weekend. This normally means excitement for the markets.
“We could use a little bit of excitement,” says Jeff Beal, market analyst with the Gulke Group. “We had a dud of a report last week. There was a lot of built up anticipation on the delayed USDA numbers and how they could break the market higher or lower. The fact of the matter is we didn't get much out of the report at all.”
This week was a “dud” week after a “dud” report, says Beal, filling in for Jerry Gulke.
What’s interesting, Beal says, is even with significant ending stocks in soybeans and corn, prices are still holding up pretty well.
“The conventional wisdom, by some analysts, is that soybeans will go into a sideways trading mode if the uptrend is broken,” writes Jerry Gulke, president of the Gulke Group, in this week’s Technically Speaking column. “However, soybeans are very close to posting a move below January lows of $9.18, which would post then a monthly key reversal lower increasing odd of an early 2019 high, perhaps a first in decades.”
“The long-term support for soybeans that goes all the way back to September that has been tested now five or six times held once again,” Beal says. “Now we have a three-day weekending coming up. The thing you don't want to see is come Monday morning this market gap lower. If it does, it would suggest that a lot of these support levels for soybeans are in trouble.”
The ongoing negotiations between the U.S. and China still weigh on prices.
“The only downside is the fact that we've kind of missed the window of opportunity,” Beal says. “The bulk of our sales to China usually occur right after harvest and on into late January and early February, when soybeans start to get harvested in Brazil and Argentina. We've missed that opportunity.”
Beal says that even if China would come in and say that they were going to buy some soybeans, the prospects of the U.S. getting back to what would be normal shipments to China for the 2018/2019 marketing year are slim to none.
“The prospects aren't really positive here in the short term, and yet, technically things are still holding up,” he says.
If current prices represent a profit opportunity for farmers, Beal encourages them to hedge some of their crop. If current prices pose a loss, there are other tools and strategies to consider.
“Even with the markets in a sideways channel that shouldn’t prevent anyone from doing good marketing,” he says.