Zwicker optimistic on markets
Dan Zwicker from Zwicker Consulting has somewhat of an optimistic view on the markets.
He feels we are going to be able to rally the market as some of his cyclical work has indicated December is more likely to be an up month rather than down. This could continue as the calendar changes to January.
“I do believe eventually we are going to see strong demand in the soybean market and I do think demand in corn is going to pick up from where we are at,” Zwicker told The Central Illinois Farm Network.
Once we get past the December delivery period, markets have a tendency to firm-up seasonally and strengthen through the early part of the growing season. This all depends on planting pace and weather.
Weakness in the corn market over the past few weeks is a reflection of that seasonality. Farmers have been selling grain since cash flow needs start increasing for the winter months. Also, there have been issues on the demand side.
“We just don’t have a lot of export demand to talk about in corn right now,” Zwicker said. “Without that export demand, there is just not a lot of underlying support in the market.”
Very strong basis levels in the Corn Belt are mainly driven by those processors grinding corn for ethanol. Farmers seek them out to move their grain into the ethanol plants. This is considered domestic demand but it is not the type of demand that would really rally the markets.
“In order to get the market to get excited, you’ve got to have export demand because that brings new buying into the market.”
This is something the corn market has lacked but soybeans have seen a pick-up in demand. Both numbers for corn and beans are well behind what they need to be in order to meet USDA’s projections they have traced out on the balance sheets.