Corn up on weather concerns; soybeans in the red
Sep 28, 2009
Corn was higher on concerns about frost injury while beans, even with good Chinese purchases, were under pressure because bean harvest is coming in with better than expected yields.
The corn harvest is just getting started in parts of the southern Corn Belt. I’m hearing above expectation trends in Missouri through Nebraska. The area where corn silage cutting continues to show some real crop stress in northern Indiana and northern Ohio, looks like they are going to get hit again.
According to our weather man the frost scare is going to be really limited this week. While we are not going to be exceptionally warm over the next 10 days, we are not going to frost either. This is not going to be helpful for the really late corn and will cause some damage but overall the crop in our opinion looks to be out there and will be a bin buster.
We realize many were hoping for a bottom like in 2006. I would like to remind you of a few things. First, the general economy was in much better shape back then and demand was being pushed with solid demand both domestically and internationally. Second, farmers had a much larger percent of the crop sold. If you ask any elevator operator around here, they will more than likely tell you that the amount of farmer sales at this time of year for the new crop is close to levels not seen in years! This leads to the observation when producers hold the inventory the market can’t really rally. Third, I am sticking to my guns, I believe we are only 31 months into an overall 50 to 60 month bottom to bottom strategy. Granted we can have price rallies but the 2008 event was such a dramatic event we could take longer than necessary in this trading cycle to recover demand and contract production.
Looking forward I’m already hearing rumbling about the crop mix decision. With good corn yields and lower fertilizer prices, the big surprise next spring for corn is there is no big change in planted acres. What happens if we see another 88 million bushel corn crop planted? How low do cash prices have to go to stimulate demand of say 750 million to 1 billion additional bushels? These are the issues we could face in 2010 rather than how high does the market have to go to ration usage or how low does it have to go to stimulate additional usage? Needless to say I want to remain short, roll forward to capture carry and look for the harvest lows to sell puts to enhance the short sales.
If you have any questions or arguments to my outlook I really like hearing from you. Remember, this is a collective effort, by working together we hopefully can improve our overall marketing performance. Have a safe and bountiful harvest! If you have any questions about any issue that you would like discussed in our daily comments please send me an e-mail at email@example.com.
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