It's time to wait and see!
Mar 03, 2009
Beans saw a nice bounce today in old crop but new crop continues to be weak under longterm concern of a big acreage increase. As for corn, it was a very quiet market as the market digests yesterday’s big price break to good support levels.
Overall, the tone seems to be wait and see for now. First, will the stock market turn up? Second, will next week’s USDA Supply and Demand report have any major surprises on carryover for corn and beans? Finally, what will the acreage report suggest?
I continue to urge all clients to lock up basis on any hedge-to-arrive contracts in corn for spring or early summer delivery. As for upside price potential, it’s going to be really difficult getting December 2009 corn back above $4.20 in my opinion.
In regards to beans I continue to suggest the March report next week should be the last really bullish event for old crop beans. My biggest fear is that we may find more beans production in South America. I would not be surprised to see global stocks build and I continue to be concerned about downside price risk in November 2009 beans longterm. Right now I’m in the “hope” phase for a bounce to get more inventory sold.
Just a quick note on out side markets, lumber and copper had a strong price bounce today. They could be putting in an important low. Gold’s under pressure but should be difficult to get June gold below $880. Cattle and hogs are stable. Supply has tightened, but consumers both domestically and internationally are not spending yet. Most traders want to be buying on technical corrections. As a seller of inventory I would only be protecting downside risk with a limited cost put right now rather than a net short futures.
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