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New All-time Highs for Grain Prices

July 20, 2012
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This information is provided by Archer Financial Services, Inc., 800-933-3996.
 

It was yet another explosive week on LaSalle Street, as grain prices continued their surge to higher levels.

The September contract led corn values higher this week closing $.84 higher. Bull spreading was also a feature in the soybean market this week as August soybeans closed $1.62 ¾ higher.

September corn traded to new all-time highs this week for any corn contract when it made a high at 8.28 ¾ on Friday. This surpassed the previous highest trade ever when the July 2009 corn contract traded to $8.26 in the summer of 2008. See current grain prices.

It is not surprising that the market would search out historically high levels in a year in which historically hot and dry conditions have plagued the Corn Belt. Demand destruction is clearly occurring at current price levels as ethanol production this week was reported at a two year low, while corn export demand remains largely non-existent.

One function of this market is to destroy that demand in order to protect adequate supplies of corn stocks, just as the function of the market will be to one day buy that demand back with lower values once the supplies become more comfortable.

Picking a top in the grain markets has been an act of futility over the past month and it may prove equally challenging over the next month. Producers should be looking at lower risk option strategies to protect this year’s inventory. At the same time they should be looking to extend 2013 hedges as December 13 corn trades near $6.50.
 

 

(click the charts below to enlarge)

 

 7 20 12 market movement

 

7 20 12 prices

 

7 20 12 COT

  


 

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