Weather Drives Farmers out of the Fields and the Markets Higher
Apr 19, 2011
Obviously, what is driving these markets higher is the same thing that is driving many of you inside and out of the fields: wind, rain, hail and for many of you, snow. There is absolutely no debating that the weather concerns are driving these markets higher, and I continue to urge you take advantage of these rallies in order to get caught up on your cash sales. I would normally remind you that just as quick as these weather premiums have blessed us they could be taken away, but with such abnormal conditions in many parts of the country, and our extremely tight stocks situation I highly doubt they will be able to take a lot of the weather premium out these markets during the next couple of weeks. Soy really has no story right now as Chinese demand fades and the South American crop grows larger. This is causing soy to once again struggle against both corn and wheat in comparison again today. You have to believe with more fears of the Chinese canceling soybean exports traders will be very cautious about adding additional premium. Remember, last week we had poor new-crop export sales and the cancellation of about 50,000 tons of new-crop beans. But I continue to believe we are going to push higher, I am a little concerned as exporters in the Gulf are seeing very little in the way of "new" demand. With this in mind I would start limiting your downside exposure to those bushels you can absolutely risk with no sever consequences. I am telling you now, the next $1 or $2, if it happens, will take us through extremely rough waters. I would personally advise lightening the load. In other words, get every thing out of the canoe if you do not want it to get wet or lost down-stream... The ride could certainly be fun, but there may be a cost involved before it is all said and done.
* Wheat is obviously once again leading the way today on near term weather concerns. Wheat being the driver tends to make me nervous. Money-flow can pressure this market and force it to change directions on dime. Weather is certainly an issue and you can not discount the poor conditions here in the US at this time, conditions in the EU and China are still debatable in my opinion. As the weather goes so will the trade. I would anticipate some consolidation today as the market looks towards more 7 to 10 day weather forecasts for direction.
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