March May Give Way to Answers in the Markets

What Happened in the Market

Corn and soybean markets took out the January highs in February led by strong demand and declining crop conditions in Argentina due to a dry weather pattern. The new administration’s tariffs have yet to show any teeth as far as grains are concerned. Corn demand remains strong. And now a short covering rally has begun in wheat due to dryness and lack of snow cover with extreme cold prompting concern for winter kill. 

March corn rallied in January and continued upward in February taking prices right up to the $5 mark before finding resistance. Support comes in at $4.73. Strong near-term demand and falling crop ratings in Argentina provide support. At the time of this writing, only 16% of Argentina’s corn crop was ranked good to excellent, with 36% in the poor to very poor category. As for new crop corn prices, they too have rallied nearly 50¢ up to the $4.75 area with overhead resistance near $5.00-5.20 with support at $4.65 and below there at $4.50.

Beans also ran up to resistance near the $10.70 area for both March and November and have support near the $10.30 area. USDA in its February Supply and Demand report lowered its expectations for Argentina’s corn crop and bean crops. Soybean ratings stood at 15% good to excellent and 36% in poor to very poor condition.

As a result of a drop in Argentina’s crops, the expected world supply for all grains was reported lower in USDA’s Monthly Supply and Demand Report. Brazil’s crops remain on track to be larger than a year ago and possibly make up for the decline in Argentina.

From a Marketing Perspective

The unexpected winter rally has allowed producers to make sales and raise their overall price average as well as set a potentially higher insurance price for corn than last year and incur a better than previously expected insurance price for beans. Last year’s insurance price for corn stood at $4.66 and beans at $11.66.

In addition to old crop sales, producers may want to get started locking in some sales for the upcoming crop as well. There is still a lot of uncertainty around government tariffs, a trade war, and how large Brazil’s crop could be. On a positive note, a bipartisan bill was introduced in the U.S. Senate that would allow the year-round sale of E-15 gasoline for the entire country. Although it would be prudent to start getting new crop corn sales made around $4.50 cash, it might also be a good idea to buy calls on those sales for summer weather. Also, new crop beans sales close to $10.50 cash is a good place to get started. Talk to a professional for ideas on a strategy that works best for your operation.

Prepare Yourself

Looking ahead, markets will be waiting to see how prices will be affected by an end to the Russia/Ukraine war, trade with China, and domestic planting acres. There will be a government outlook conference on acres coming up at the end of this month. Currently, trade is looking for an additional 3 million acres of corn over last year and fewer bean acres. In addition, the March Supply and Demand Report coming out March 11 could show an uptick in corn demand and lower ending stocks, since no adjustments were made to these estimates in February.

While things are fairly quiet right now, prepare and watch as March quickly approaches and things may change rapidly. Put yourself in a good position to strike when needed or reach out for additional information. Be sure to understand the risks and rewards of any strategy before entering.

If you have questions, you can reach Cathy at [email protected] or visit www.TotalFarmMarketing.com for more information. 

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.