Old crop beans continue to be the front runner in grains!
May 19, 2009
Old crop beans continue to be the star right now. Tightness in global supplies due to Argentina’s reduced crop appears to be making all end users move more aggressively to stockpile inventory. Everyone remembers last year and do not want a repeat. Another positive reason is the U.
S. dollar continues to drop. As holders of the U.S. dollar continue to expect unchecked government borrowing by the U.S. administration, its holders are motivated to buy “things” now rather than hold a currency that going down in value. As a side note, the U.S. dollar is down over 7% in value in the last month or so. The producer is now seeing November 2009 beans at $10. This makes the budgets work, but the fear of what is happening to old crop is keeping producers from doing much new selling. I suggest focusing on buying an at-the-money November put and rolling up if the market rallies. Refrain from selling cash or selling futures because of the old crop situation.
Corn was stronger all day, but not explosive. You can tell the market wants to stay around $4.50 (December corn), but it does not want to take off in any direction until it gets a more solid feeling on exactly how many acres are planted in the next 10 days. We may get some rain on Friday and/or Saturday, but not as bad as next week. If this market continues to rally into Thursday, I would not be surprised to see some profit-taking by late Thursday to early Friday. Right now it appears corn is range bound. Seasonally it has into mid-June to early July to rally, but after that I believe it will be extremely difficult to see a counter seasonal rally from mid-June into early September. My suggested game plan continues to be rolling up puts. Refrain from selling calls or bear spreads in corn until we get past the June supply/demand report and more closer to the acreage report due out the end of June.
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