Market analyst: To sell or not to sell?
Last week we informed you of the market top, and those who sold on that news have got to be very happy with the results, basically selling within 5% of an eight-year high in multiple years of crop sales.
That's going to look very good compared to the 'wrong side Randys' of the marketing world, who are still calling it a correction.
Funds have really got to appreciate these marketing losers, as it always guarantees that there will be other losers who listen to these guys and buy grain from the funds at or near the tops, nearly every time. When will they ever learn?
While Pro Ag stored three crop years of spring wheat, over two years of soybeans, and almost two years of corn stocks into the 2020-2021 rally and sold all of it at exceptional price levels, along with another year or two of additional new crop grains, there were marketing losers who were selling at $7.00 soybeans for fear of it going to $6.00. Never mind that soybeans were already at multiple year lows. However, some economists were all decrying our trade war and getting all the political advantage they could from their 'wrong-side Randy' market outlooks. Boy, does that show now!
If you were duped by these experts, perhaps you need a different marketing service.
Starting in June, Progressive Ag/Ray Grabanski will be hosting 10-15 minute weekly update "Pro Ag Marketline" meetings every Saturday morning at 7 a.m. We will record these sessions and post them on our website.
If you are having trouble keeping up with market changes or our recommendations, we would strongly suggest spending 15 minutes every Saturday morning getting updated live or watch the recorded webinar. You can contact anyone in our office at 1-800-450-1404 with your email address to get on these updates, a great replacement for two hour seminars/marketing club meetings you sometimes have to drive hours to see.
As for today, the market continues to plunge lower, with virtually no change in fundamentals except some improvement in soil moisture levels in the western corn belt.
However, the market rallied $1.00-2.00 from March 30 to May 12 with no change in fundamentals, so it's likely to drop $1.00-$2.00 by the time we are done, too, with virtually no change in fundamentals. That is just simply what market tops look like and how they behave, and this most certainly now can be called a market top in wheat, corn and soybeans.
If a major crop problem develops this summer yet, like a drought, we could rally back up to new highs or the old highs. But that is a big 'if'! Right now, there is no sign of that type of occurrence, as our drought pattern ended in mid-January and if anything, the drought affected area has been shrinking since then. It shrunk again this weekend in the western corn belt, where 1-2 inches of widespread rains fell again.
Weather includes mostly normal/above normal precipitation over the next week, and below normal temperatures are now forecast which is mostly favorable.
The 8-14 day forecast calls for above normal precipitation, with mostly above normal temperatures in the north, but below normal in far southern areas.
Overall, this is a bit of a shift to cooler weather. Some specific states called above normal precipitation in the next week (SD, MN, NE, OK, TX, WI, NM) and the rest are mostly normal. Combined with the cooler temperature forecast, this is another non-threatening forecast.
Crop conditions continue to show an early planted crop, with winter wheat continuing to improve with above normal yield potential. However, the first ratings of the year show a spring wheat crop that is the lowest rated ever, even lower than 1988, at only 45% rated good/excellent.
Barley is also poorly rated at only 47% rated good/excellent (vs. 67% last year), mostly due to a lack of soil moisture in the west resulting in poor germination. Soybean are 75% planted (21% ahead of normal), oats 95% planted (5% ahead), barley 91% planted (4% ahead), and spring wheat 94% planted (9% ahead).
But while spring wheat/barley is poorly rated now, recent rains will likely improve those ratings as it has already in pasture conditions (28% rated good/excellent this week, an improvement of 3%).
Soil moisture levels across the nation continue to improve, with topsoil up 2% to 68% adequate/surplus this week, and subsoil up 1% to 64% rated adequate/surplus. The soil moisture continues to increase, while normally there is a decline throughout the year, meaning the current weather pattern is favorable for crop development and optimal yield potential. But, note that western spring wheat areas are currently still in rather dire straits.
We are way overdue for a recovery in these markets of at least 38%, at which time producers who didn't sell enough yet can make catch up sales within about 5% of an eight-year high in grains. If you haven't sold enough, you need to get a lot more sold in the next week or so, hopefully on a bounce back of at least a few percentage points.
Ray Grabanski can be reached at email@example.com.