Question: What do the following phrases have in common?
“Somewhat mixed.” “Range bound.” “Choppy trade.” “Sideways market.” “Trading range.” “Quiet trade.” “Lack of news.”
Answer: They are different ways of saying the same thing. All of them describe the corn and soybean market since harvest ended.
I made this list listening to the daily markets and the analysts’ opinions. A few days ago, I heard a single word to add to my list. The word was “drifting.”
I looked at the market prices as of Nov. 1 and compared them to today.
My local ethanol plant was paying $3.52 last November for cash corn and $3.67 for March delivery.
Cash corn for the first Monday of March was $3.35 at the ethanol plant
My closest elevator priced November corn at $3.45 and March corn for $3.59. Cash corn for the first Monday of March, 2016 was $3.21 at the local elevator.
Soybeans at the elevator last November were $8.13 cash and $8.28 for March. Compare that to today’s cash price of $8.21.
But in listening to the analysts, they hold out some optimism for a slight improvement in prices in spite of a lower trend.
Price rallies are described in modest terms of nickels and dimes.
But no one wants to commit to whether we have seen the bottom or not.
Corn for $4 and soybeans for $10 look like optimistic goals. I am not sure if they will be reached because as soon as they get within pennies of those prices, a lot of farmers, including me, will start making sales. That’ll kill any rally.
About 15 years ago, my banker and I were visiting and he said, “We earn the net and spend the gross.”
After he said that I wondered if he was talking about farming, in general, or me, in particular. I didn’t ask him any more questions because I didn’t want to know the answer.
At that time, corn was around $2 a bushel, which was close to the cost of production. We depended on loan deficiency payments for additional profit.
Back then I heard about “burdensome supplies” and today I haven’t the word “burdensome,” but I have heard “adequate supplies.” The big word now is “carryout.”
Fifteen years later, corn has doubled in price since then and expenses have risen as well and for many farmers expenses exceed income. Loan deficiency payments have been replaced by crop revenue insurance.
Phrases such as “the funds” or “managed money” and “dollar index” are today’s market movers where 15 years ago, supply and demand set the market tone.
I have a different banker, but earning the net and spending the gross remains in place.
And I still don’t want to know the answer.
Rye is a Farm News staff writer and farmer from Hanlontown. Reach him by e-mail at firstname.lastname@example.org.
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