Market Report: The Black Swan

There is an old phrase in the grain markets, "beware of the Black Swan." This refers to an unexpected event that takes the markets lower. Today we had a Black Swan event. I got to the studio this morning and corn was down about a penny and beans 5-6 cents. Corn put in a new contract low to start 2016 with losses of 6-7 cents. There was some economic report out in China that was much worse than expected and their stock market was down 7 percent! Trading had been suspended a couple of times for a few minutes as a "circuit breaker." This had never occurred before in the China stock market. The bad news spread as the stock market in Japan was down 3 percent and here the Dow was down more than 400 points. There was not a lot of other new news for corn traders to focus on, so I guess corn losses could have been worse. However as one trader put it, "corn is already at the bottom of the barrel."

When I saw beans were down 5-7 cents this morning, my first thought was northern Brazil did pick up rain over the long weekend and there was more in the forecast. They did get rain but how much depended on which weather report you read. Some said light scattered showers and others just said "beneficial rains." It likely did not make much difference which report you saw because when traders saw rain they were going to sell. Then you add on the Black Swan of stock markets melting down and maybe we were fortunate beans were only down 6-8 cents. Weekly export Loadings had a good number at 1.511 MMT. That was up 7 percent from the same week in 2014. It seems like as bearish as all the markets are you keep thinking it cannot get any worse and then it does. Thank you Black Swan!