Corn-Bean Ratio Below 2.3
Jun 21, 2013
Grains and oilseeds were lower again following Thursday’s selloff. The market had been rather mixed at the midpoint of the trading session but had an especially poor close. For the week December corn closed up 23 ¼ cents while November soybeans were down 24 ¾ cents! Cattle-on-feed was at 97% and placements at 98%, both a little higher than expected but the beef stocks were well below expectations.
Last week we mentioned how outrageous the corn-soybean ratio was getting after it surpassed 2.45 to 1 especially during a late planting year. The spread has since retraced and is now down to a reasonable 2.29 (see chart). Some may argue this retracement in the spread/support in the corn is due to the warm/dry weather in the forecast. We don’t see that as a threat at this time. The market was just pricing in a premium for overly wet and cold conditions and now the chance for drier and warmer weather is an imminent threat? We still have to get through the month of July without weather issues but we find that a normal weather pattern will be more likely than drought which some are already calling for again. I think the default assumption is that problems will arise since we have had three bad growing years in a row and the memories are fresh.
Next week will be filled with fresh fundamental news for price fluctuation. Monday we have crop ratings for corn and soybeans as well as soybean plantings. Friday we will have the highly anticipated quarterly stocks and acreage report. The average acreage guesses are in from the Reuters poll. They are pegging corn acreage at 95.313, soybeans at 77.933, and all wheat at 55.902. We will notify you when the quarterly stocks estimates come in. Have a great weekend!
Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may not place an order to buy or sell commodity futures contract by e-mail. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents. EHedger LLC will not disclose anyone's position due to their confidential and proprietary nature. Recipients assume the risk of reliance on and indemnify and hold EHedger LLC harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information. The contents of this e-mail message and any attachments are intended solely for EHedger LLC's customers and brokers. This communication is intended to be and to remain confidential. Any duplication or distribution without the express written consent of EHedger LLC and this disclaimer is prohibited. If you are not an intended recipient of this message or if this message has been addressed to you in error, immediately alert the sender by reply e-mail and delete this message, its attachments, and any related messages from your computer and destroy any hard copies. If you are not an intended recipient or this message has been addressed to you in error, you are prohibited from delivering, distributing, disclosing, printing, copying, or relying on this message and/or any attachments. Opinions are solely those of the author and subject to change at any time, and are not a solicitation or recommendation to buy or sell commodity futures or commodity options. Past performance is not indicative of future results.