News remains a negative in grain markets

The grain markets are preparing for the upcoming planting season but dealing with a “slug” of negative news, said Don Roose, president of U.S. Commodities in Des Moines.

Roose said recent USDA reports have been negative, with yields and ending stocks rising, adding more available supply and not much more demand.

“We’ve had such a slew of negative news, and weather in South America has turned non-threatening. It’s about how much of this is dialed in (to prices,)” Roose said. “I always tell people that this time of year, you start to look for a low. You get enough producers selling that it gets digested in the market. Funds are at a near-record on corn and a five-year high short on soybeans, so that tells you the direction we’ve been trying to push.”

Argentina is projected by some outlets to have a record production year, rebounding from a tough 2022-23 season and several weeks of extreme heat this growing season. Roose said there are still unknowns as to just how well the crop recovered from those temperatures, but their major corn exports come from their second crop, which will pollinate in April.

“There’s a lot we know and a lot we don’t know,” he said. “We also have the full growing season ahead in the U.S. and weather has been erratic throughout the entire world. We are watching for any kind of a bullish card that can pop up and spook funds out of their short positions.”

He said the week’s USDA Ag Outlook Forum, held Feb. 15-16, may bring some negative news to the markets.

“They use the baseline numbers going forward,” he said. “I expect we will see a 5-7 billion carryout on corn and 350-400 million carryout on soybeans, but I think the trade will watch that as more of a barometer for budgets going forward.”

Roose said another impact for farmers will be found in insurance levels. Price levels are “substantially lower” than at this time last year, so there is less price protection than in previous years.

“You don’t have that umbrella or parachute covering you,” he said.