Category Archives: World market

It’s Wednesday and I am in Las Vegas for wheat grower meetings.   As we walked through the casinos I decided that people a) have to much time on there hands or b) have to much money on there hands.  We feel like we work to hard for our money to drop it down the throat of a slot machine.   My wife and I aren’t much for gambling aside from the sports book, she likes horse races and I like football.

If you pay attention to the football odds you know the injury report has a huge bearing on what might happen.  For example, everyone knows Brett Favre has a bum ankle but he’s playing, so he most likely will be listed on the injury report as being probable of playing.  If the report comes out and he is listed as doubtful, you can be sure the odds will weaken for the Vikings.

Likewise, in grain marketing, we have reports that greatly impact the market.  On Thursday USDA will release a supply and demand report.  The market has priced in a lower crop of corn than USDA has projected.  These rumors started showing up a few weeks ago and it really showed up in the market last week.  This week, we are in wait and see mode.  If the report comes out with less corn (Brett Favre listed as doubtful) than the trade guess the market will  most likely go up.   If the report comes out at about the same as the trade guess (Brett Favre probable) the market may have a ho hum reaction and not much will happen.  But if the market comes out and says there is more corn in the field than anyone expected, well, look out below the market will most likely tank.

To add to the difficulty you have to look at what effect supply has on other crops.  To little corn will encourage planting of corn next year and less wheat and soybeans.  But, in a year like this when the Russian drought has traders concerned about global supplies of wheat, traders have to decide what has more importance, to little wheat or to little corn.

It seems to me that an hour session learning how to play craps would be more profitable than figuring out how the grain markets work.

One thing most people don’t realize is how the world markets affect a farmers life. A quick look at this weeks Pro Farmer newsletter shows that a farmer has to look at crude futures, the value of the dollar, the price of gold, the Greek debt crisis, the financials, the price of gold relative to the price of corn, the list goes on and oh yeah, how about the price of wheat, corn and soybeans.

Many farmers don’t even realize how much the outside markets influence our life. Back in the day, fundamentals of a crop ruled the world. If spring wheat was short, the Minneapolis Grain Exchange price would reflect that fact. Maybe you would have to look at the yields in other states but certainly you didn’t have to look outside of the country to decide what might happen to the price. OK, maybe you could consider Canada. Most recently, the wheat crop in the Ukraine has had as much to do with the price of wheat as what happens in Minnesota. We also have to take into consideration what the crop quality is like. The futures price is only a suggestion of what the farmer gets in his pocket. Now, the European economy influences the price of oil, the price of oil influences the value of the dollar, which influences the value of gold, which, some say, influences the price of corn, which influences the price of wheat in Hallock. Oh, for the good old days, when a bushel of wheat was a bushel of wheat.