Grain

Hope for Corn/Bean Recovery After Crude Oil Market Gains

Commodity markets

With Good Friday being a holiday for the Board of Trade, Tom Guinan, Producer Grain Marketing, took a look at some of the other “commodities” that have been under pressure the past 30 days.

Here’s Tom’s Take:

I wanted to see how the other commodities have recovered since they hit their low on the Board of Trade. 

I started with both crude oil markets. One of these is West Texas Intermediate, used mostly in the western hemisphere, which hit a low on March 30th at $19.27 per barrel. At the close Thursday, it was up $3.49 from that low, or roughly 18% higher. Brent crude oil is used by much of the rest of the world, and it hit a low on April 1st, at $24.54. Since then it climbed to $6.94/barrel, or about 28%. Ethanol futures also hit a low on April 1st at about 83 cents a gallon, and climbed 11 cents, by the end of last week, or 13%. Finally, gasoline futures (or RBOB), hit a low of almost 46 cents on March 23rd and then gained more than 21 cents a gallon, or an amazing 47% higher. The Dow Jones was also up more than 25% from it’s low. 

Now, let’s compare these to “our” commodities of corn and beans. Both May and December corn futures hit their low last Monday, April 6th, with May futures bottoming out at $3.25 1/2 was up 6 1/4 at the end of the week. December’s low was $3.46 1/4, and through Thursday’s close was up 4 1/2. Both of these were only up a little more than 1%. It’s a little better for beans, with May futures up 32 3/4 from their mid-March low and November futures are up 39 through Thursday, both of these are about 4% higher. 

By looking at the recovery of these other commodities, it gives me a little hope for better days for corn and beans.

If we could somehow manage even a 10% increase from the lows, that would mean corn would be 25 to 30 cents higher than the low, and beans would be more than 80 cents higher.

Granted, there are other items impacting corn and soybean values. I am not saying that you should wait for a 30 cent rally in corn or an 80 cent rally in beans. But, I am saying if crude and gasoline can maintain their gains, or add to them, we should begin to see corn and beans recover a bit more.

If/when we see any kind of weather led rally this spring, we should all be thinking about pricing out some (most?) of our Old Crop and maybe even look at pricing some New Crop. Now is the time to put in some firm offers.