The Acreage Debate Goes On
Jul 02, 2009
The debate will go on for some time if this week’s acreage report is correct. As of now I believe one has no choice but to accept the fact that corn acres are greater than anticipated. Granted they could dip a little but not enough to really affect the final out come. As for beans, I’m still in the camp of a few more acres will be found that were not reflected as of June 30th.
So what do we expect next? First next week’s crop rating should show very little decline in the quality of the crop. In fact we could see near record levels as the rain and moderate temperatures in the Midwest have helped to improve crop development.
The next factor after that will be the July 10th USDA Supply and Demand report. One now has to anticipate that carryover will be increased significantly and talk of a 1.8-billion-bushel corn and 250-million-bushel bean carryover will be seen.
The final straw will be the old crop corn inventory that’s going to be forced into the system before new crop inventory sets in. Just how far do we have to go down in corn to absorb a 1.8 billion to 2.0 billion bushel corn carryover? This will be the debate!
Granted right now we have the influence of the weaker dollar and stronger crude oil prices which could take off some of the bear’s advantage but the tone seems to be clear. Sell any two to three day rally or any 10 cent or better price bounces for most of July and early August. In a nut shell it more than likely will not be safe to be long corn until we are past the August USDA Supply and Demand report.
As for beans, yesterday showed us they can rally but how much more? While we did get some help for new crop beans in reduced acres I still would argue more acres are coming. This all suggests November beans above $10 is more of a sale than a buy. I’m in the process of sending out a special alert on the bear spread in new crop. I want to argue that carry is going to come back into the inverted carrying charge market that presently exists. If you are interested, contact our office for the special alert (800) 843-1488.
Finally, we invite all clients to enjoy the 4th of July weekend. We are having a big party here in New Richmond all day Saturday. In fact we are having a big fly over by the some jets in the morning, talent contests all afternoon, and a great fireworks display in the evening. If you are in the area come on over. If not celebrate with your friends the freedom we have, dare we take it for granted is when we may quickly lose it!
If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or email me at email@example.com or firstname.lastname@example.org.
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