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Market Thoughts 3.12.23

Updated: Mar 14, 2023

· May corn lost 22’4 cents, blowing through last week’s 622’2 low and trading all the way down to 606 before recovering slightly to close at 617’2. That is now the lowest close for May corn since the July 18th seasonal lows. May soybeans lost 11’6 to close at 1507, performing much better than corn and wheat and remaining well above last week’s 1477 low. May spring wheat lost an incredible 48’2 cents and closed at 824’4, making a new lifetime contract low in the process.

· Another ugly week as spring wheat failed to hold key support, something we feared would happen, and corn did the same, something we expected wouldn’t happen. This sort of price action is consistent with a significant fundamental catalyst (typically good growing season weather), but that isn’t the case currently. The March WASDE report was outright bullish to beans, neutral to wheat, and slightly bearish for corn. It’s a troubling sign to see markets fall despite supportive WASDE news and more confirmation of the longer-term trend change. At this point, both our price signals and traditional tech indicators agree the current selloff is way overdone, setting grains up for at least a short-term technical bounce. But we’ll mention again, as we have numerous times since October, our expectation continues to be for grains to follow a seasonal pattern similar to 2013. This means (meant) consolidation at high prices through the winter, followed by a collapse into spring and, ultimately, a gradual slide lower all summer. Regarding a short-term bounce, alongside technicals, wheat could benefit from the Ukraine export deal not renewing on March 18th and lower acres on March 31st. Corn really needs export sales to support a recovery.

· Revisiting new seasonal crop comparison charts for all three crops:

  • Worth noting the abruptness/timing of this price break creates a unique situation where wheat and corn are both already down around 7% already from spring crop insurance prices.

  • All three crops follow a remarkably similar pattern to 2013. If this continues, it suggests modest further price declines now followed by a recovery of 5-10% into early summer before resuming the longer-term downtrend.

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