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Stay vigilant with grain marketing over the holidays

Cash markets, light trade volume, and global geo-politics need to be monitored.

Naomi Blohm, senior market adviser

December 23, 2021

4 Min Read
Barn with Holiday Wreath for Country Christmas

It’s been an exciting few days for grain trade with nearby corn futures trading over the $6.00 price resistance level. Soybean futures also enjoyed a dramatic technical feat with January through August 2022 futures contracts trading over $13.00!

Fundamentally, the continuation of dryer weather in portions of South America and strong grain demand is keeping grain prices firm.

While it might be tempting to want to shut off the markets for a few days to enjoy some holiday cheer, you can’t this year. Please stay vigilant. There are many reasons why grain prices would likely stay higher, but one black swan could swoop in and wipe out the recent friendly sentiment.

Here are four things that have my attention to monitor in the days ahead:

Basis potentially widening out

Based on recent conversations with producers, there is likely going to be a lot of grain sold in the coming days. Much of it is due to the recent rally, and some is because farmers have grain in the bin, time to move it, and a new tax year around the corner to reward with cash sales. With plenty of grain coming to market, that may widen out your local cash basis as elevators gain corn and soybeans in their possession.  

Geo-Political Drama

The world continues to eye Russian President Putin and his aggressive approach of the Ukraine border. Experts have suggested that Putin would not be ready to invade Ukraine (if that is indeed his end game) until early February, however some are suggesting he could be ready to invade sooner than that.

Related:The 9 grain market indicators to watch, now through the New Year

Let’s hope cooler heads prevail and world peace occurs for Christmas.

But I do find it curious that President Biden is not heading out of town for the Christmas holiday. Surely a trip to his home in Delaware would be on the to do list, but apparently not this year. It was just announced that he is staying in Washington. Perhaps to keep in better position to monitor global events?

Human and livestock health - Omicron and African Swine Fever

Omicron continues to spread. Various forms of lockdown or new masking mandates are starting to creep up around the world. Sometimes these lockdowns arouse fear in the market, and fear selling then pushes prices unexpectedly lower.

Currently, African Swine Fever is NOT in this country. The pork producers of the United States need to be thanked for this, along with the tremendous efforts of those taking safeguards to make sure it does not enter our country. Many thanks and hats off to you. African Swine Fever has been located in the Dominican Republic. One thing in the back of my mind is that the Caribbean is open for business, and cruises and cruise travelers are island hopping. While no one would ever wish for African Swine Fever to arrive in the United States, just be mindful that if it did, that would significantly hurt grain demand for feed, which would likely drop grain futures dramatically.  

Related:Three simple marketing strategies for corn into year end

Light trade volume and three-day holiday weekend

The markets are closed on Friday this week for Christmas Eve and Christmas. Volume over the holidays and between Christmas and New Year’s can be traditionally lighter as traders and market participants take vacation. Sometimes when volume is light, and participants are not around, one big order or one big piece of market news can move the market more than normal.

Remember, marketing is how you get paid for your hard work. While the outlook and technical charts for the grain markets is currently friendly, just be mindful of what pieces of news could potentially rob you of your holiday cheer.

There are so many moving parts to the market this year. Please stay vigilant over the holidays.

Reach Naomi Blohm: 800-334-9779, Twitter: @naomiblohm and [email protected].

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. 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.

About the Author(s)

Naomi Blohm

senior market adviser, Total Farm Marketing by Stewart Peterson

Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.

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