The Hueber Report

If we were to solely focus on the soybean market, this would have appeared to have been a fairly uneventful week.  If closed right now, this market would be down about 6-cents, but still contained within last week’s trading range and in the same vicinity that we have been for months.  That said, once we enter the grains into the picture, it becomes rather bleak looking.  Closing at this moment, corn would be down 15-cents and at the lowest levels since last September.  As rough as that may have been though, it pales in comparison to wheat as this market would have surrendered 33-cents, is completing the third week in a row of heavy losses and reaching down to the lowest level since April of last year. What has happened that evidently encouraged the bulls to share a tall cup of hemlock with each other?  In a nutshell, disappointment.  Disappointment that we here in the U.S. have been unable to capitalize on a larger share of export business.  It probably began when the initial rumors began to circulate that Russia could be limiting exports this year, which of course never happened.  In fact, it is currently estimated that Russia has another 4 to 5 MMT of old crop wheat that is yet available for export.  Then we got our hopes up a bit with the drought in Australia, believing we could capture a larger share of the far-east market this year but alas, they were able to turn to Argentina for supplies.  I think there is an old saying that “If I didn’t  have bad luck, I wouldn’t have any luck at all” and that would certainly seem to apply to the U.S. wheat trade this year.  

I would like to believe that we are quickly approaching the oversold/value region for this market and should begin seeing prices stabilize once again.  Of course, that would not necessarily mean an instant reversal, which brings along the other problem this creates.  It is a drag on corn prices.  While we here in the United States primarily view wheat as a food grain, the rest of the world looks at it as both food and feed and even though the overall corn fundamental picture is not bearish, it has this excess weight holding it back.

Of course, there is another saying that bares repeating. “Hope springs eternal” but I maybe I should rephrase that as “Spring brings eternal Hope.” We should be about to enter that period of the year when markets begin to refocus on the growing season ahead with all the risks and uncertainties that surround producing another crop.  When that happens, we generally try and build a little “risk premium” into the price level, and I would dare say that corn and especially wheat have none of that built into prices at these levels.