Fundamentally Speaking

Been quite a quarter for trading even with one day left and ahead of the big USDA reports, including the quarterly on and off grain stocks as of March 1 and the planting intention figures.

Even before the war in Europe started, the grain and oilseeds complex had been boosted by another year of poor weather in South America resulting in row crop production well below what had been anticipated at the start of the season.

A year after Brazil has their worst corn yields relative to trend in over 20 seasons the same thing has happened in soybeans.

You also have had a huge influx of fund buying as the surge in inflationary pressures to 40-year plus highs has boosted the investor appeal of commodities as an asset class, particularly given the negative correlation commodity returns have with equities and bonds in this type of environment.

That has accentuated the gains already scored due to the grain and oilseeds inherently bullish fundamentals.

Add to these problems creating enough crop production given an acreage base here in the U.S. that is not increasing and Mother Nature/climate change/just bad luck adversely impacting yields at a time when records are needed.

A quick look at both the dollar per bushel and percent change in corn, soybeans and Chicago wheat for the first quarter of the year going back to 1990 shows all three having their largest (Jan-Mar) advances ever, at least through today's action, with corn up $1.41 per bushel, soybeans up $3.19 and wheat up $2.36.

On a percentage basis, wheat's advance of 30.6% is the greatest first quarter gain on a percent basis since at least 1990 while the corn gains of 23.8% actually exceeded this twice since 1990 with a 24.6% gain Jan-Mar 2008 and the greatest percent increase in the first quarter seen in 2004 of 30.0%.

For soybeans, first quarter gains of 24% appear to be the second highest ever next to the first quarter in 2004 of 26.1%.

Should also note that this is only the third time since 2005 that all three contracts scored price gains the first quarter of the year.

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