Grains were higher across the board on strong outside market influence. The dollar was the big news today and it continues to retreat after making a double top at the 90 cent level. The dollar was down over 71 points to the 86.75 level. It really appears the dollar has topped near term and is going to retreat. This is giving hope to the continued strong export recovery in corn and beans.
Additionally, another bullish reason cited was the continued talk by many economic and elected officials of several countries around the world the need to have a concentrated stimulus program. Since the G-20 meeting is coming up in April many traders are reading between the tea leaves and suggesting that even more government spending is on the agenda. This is being seen as bullish for commodities.
While there is still snow on the ground in the northern Corn Belt, I’ve heard that planters are starting to run in Missouri today. At this time it appears the concern about a cold and wet spring is still a concern for the market which is also giving a bullish undertone to the market.
We have gotten past the John Deer lows? I would suggest if producers did not move inventory to make necessary cash flow needs by now they have decided to hold all the way to May to June in hope of seasonal strength. While this is helping to firm prices now I continue to stress the net impact on producers net cash selling levels will be limited because of the potential for basis to widen. Here at UMS we hope you did lock up your basis on any old crop sales and are going to use the current price bounce to move inventory. Our suggestion continues to be $4 lead month corn futures, $9.50 lead month bean futures, and $5.50 lead month wheat should be levels where one should seriously consider pricing all basis contracts.
Question: Dec 2010 corn is at $4.35 today, what price is it going to take for you to get interested?
If you look at Dec cotton and July wheat, deduct the local basis many are saying prices are at major loses. This raises the question will the invisible hand of economics motivate the producers to stop producing and go to other crops like corn and beans?
I’m going on the road to New York midweek to talk to some of the surviving investment firms. It will be interesting to see what’s on their mind about ag.
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