Grains finished the week out on a strong note, with corn, soybeans, and wheat all closing higher. For the day, corn closed up 6 cents, wheat closed up 4 cents in Chicago, and 6 to 8 cents in KC. Soybeans closed up 14 cents on the old crop, and new crop rallied 12 cents. Soybeans were helped by an export announcement of 4.5 mln bushels sold to Unknown for 2023/24. For the week, corn closed up 1 1/4 cent , soybeans closed 11 cents lower, and wheat rallied 4 cents in Chicago, and 6 cents in KC.
The outside markets had extreme volatility today, thanks to new concerns in the Iran/Israel conflict. Gold spiked over $60 higher to break thru the $2,400 level for the first time ever, but then traded $20 lower, and closed a $1 higher. The nearby gold contract had a $93 an ounce trading range today! Crude oil had $2.00 gains early in the day, but ended up the day just 64 cents higher. The dollar index rallied 0.768 points. It felt like part of the rally today today was an inflow of money to commodities and hard assets.
It was a rough day in the stock market, with the NASDAQ closing down 267 points, and the Dow Jones down 475 points at 37,983. It was just a few weeks ago that we were talking about Dow Jones 40,000. Fast forward 10 trading days and the Dow Jones index has closed lower 9 out of the last 10 days. Since the 2nd Quarter started on April 1st, the Dow Jones is down over 5%, erasing part of the 19% gain since October. The uncertainty of interest rate cuts and now geopolitical concerns in multiple areas of the world is sending some traders to the sidelines. Talk of reinflation risks with the CPI report, as well as rising interest rates this week is also a factor.
Active planting progress and fieldwork is being reported in parts of Illinois, Iowa, Missouri, and Nebraska, while other areas of Illinois and Indiana dry out from recent rains. Temps are expected to be in the 80’s on Sunday, with a strong storm system moving across portions of the corn-belt on Tuesday. The latest 6 to 10 forecast is cool and dry while the 8-14 day forecasts are normal to below normal temps, and below normal precip. This would be good news for those wanting it to dry out in the Eastern Corn Belt.
The corn chart below is a look back to 2007 and the life of contract price ranges for December corn. Life of contract means from the first day that a contract starts trading on the CBOT, to the last day it goes off the board. We could spend a whole commentary talking about when these highs were made and the reasons why they were made, but we won’t do that today! The key take away from this chart is the $5.00 green line and the little white dots on 2024, 2025, 2026. The white dots represent the current closing prices today, and all 3 crop years are sitting below $5.00 Dec futures. The current futures price for December 2024 is sitting at $4.72, which is 26 cents away from the middle of the 2024 contract range of $4.98, which had a high price of $6.02, and a low price of $3.955. The 2024 contract low is currently 77 cents below the closing price today.
Looking back just 4 short years ago, we went from 2017 to 2020 without breaching the $5.00 price level the entire life of the 2017, 2018, 2019, and 2020 futures contracts. That brings up the next question, is December 2024 corn at $4.72 fairly priced compared to those years, or do we have 75 cents or a $1.00 of risk premium still built into the current price? Carryout projections could be as high as 2.5 to 2.8 bln bushels for the 2024/25 crop year. Maybe reinflation is in play, meaning that we will have a higher price level to keep supply and demand in check. From 1973 to 2006 we never traded above the $4.00 level, and in recent years since ethanol came on board, the $4.00 level has held as the new support area. Time will tell if the market is setting up a new “Higher Floor” due to inflation, but if we get a chance to sell $5.00 new crop corn futures we will be taking advantage of that opportunity. Below we show the December Corn futures history since 1973. We are sure a few of you remember the “Good Ole Days” of almost $4.00 corn back in the 70’s, as well as the Sub $1.50 corn futures during that time frame too!
The following soybean chart is a look back to 2007 and the life of contract price ranges for November soybeans. The key take away from this one is the $12.00 red line and the little white dots on 2024, 2025, and 2026. The white dots represent the current closing prices today. Similar to the $5.00 line on the corn chart, the $12.00 line on the November futures chart was not breached in 2017, 2018, 2019, or 2020. The current futures price for November 2024 is sitting at $11.75, which is about 3 cents away from being smack dab in the middle of the 2024 contract range, which had a high price of $13.80, and a low price of $9.6425. We are currently $2.10 higher than the life of contract low, and $2.04 from the life of contract high for the 2024 contract.
That’s all for today. See you here Monday.
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