The corn, beans and wheat complexes were strong today, even with nasty weather hitting the Midwest. Rain in South America did not dampen the bull’s resolve right now. The US Dollar was down over 400 points, while cotton rebounded back close to previous highs.
Going into last weekend there was some concern about the corn crop in South American. The tone seems to be developing that it’s too late to really help the corn crop. The damage has been done, but the soybean crop could be helped. The key is immediate rain relief. Right now I would have to say it’s bullish to corn and bearish to soybeans.
The Chinese delegation is in the USA this week. Expectations are very high that some sort of major corn purchase will be announced very soon since reserves are still quite low in China. Food inflation is becoming a major issue for the Chinese government. They know if they don’t keep food on the plates, their control over their population could be threatened.
I believe concern will remain very high that competition for planted acres will be extremely high this spring. The market wants to put a lot of premium into the market to assure producers are given sufficient incentive to plant acres. We cannot stress enough the importance of having a nice warm spring. If it is cold and wet, the market will resume another leg up to ration demand and stimulate supply.
To my way of thinking, the trend of the market seems to suggest a lot of pre-planting price incentive will be in the market as we move into the March to April time period. We really want producers to have a selling floor in place for most of their expected 2011 crop before the middle of April and then use any sharp price run up in May and June to sell expected 2012 inventory. If anyone is interested in learning more, plan to attend our upcoming pre-planting meeting on February 12. For more information, go to www.utterbackmarketing.com
or call my office [800.832.1488 or 877.898.4324]. We have a list of my upcoming meetings; plan to attend one possible.
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