Outside market concerns and weather are driving the grain market
Jan 21, 2009
The bean market recovered a little today on short-term oversold conditions, continued solid export inspections and concern about weather conditions in Argentina. Wheat was stronger on some Egyptian purchases along with some dry weather in Texas. I don’t see this as exceptionally bullish, it’s just wheat is essentially neutral right now, anything positive can push it a little. However, long term there is limited upside potential for wheat with larger global supplies on the horizon. I suggest you can still wait to price but if you have unpriced inventory to sell around harvest time, you have until March to get something done. Just don’t be too optimistic on price.
As for corn I still want to believe we are going to have some product movement once the weather gets better for in the Midwest. As we move into February, corn will be moving and much of the Argentinean weather will be over. Looking forward to the February USDA Supply and Demand report, I have to suggest everybody must be getting prepared for bearish numbers in regards to the carryover numbers. Ethanol usage and exports will be prime candidates for reduction. While I’m not ready to push up my carryover numbers yet, there is a growing risk that carryover numbers for corn could be pushing 2.1 billion by early summer. This means we are going to have to have actual confirmation of more than 3 million acreage reduction, solid recovery in demand and yield reduction influence to get the corn prices back to levels I know all producers want.
While I’m trying to get producers to start preparing for a speculative long position in corn from mid-February to June, I will only consider such a position if I see a solid correction in corn below $3.60 in March or more preferred December 2009 below $4.10 to $3.85.
As for you speculators out there, I would suggest you take a look at the December cotton chart. If we can get a solid correction in February to a double bottom, I believe it will present a long term decent investment. Call if you are interested.
Final comment: We are now in the crop insurance season. We realize it’s a big financial expense but taking out an 80% CRC crop insurance program on beans could really give you a solid financial reward. By having the insurance in place and then selling the cash the potential for returns will be huge. If you have any questions about crop insurance give Rowland a call here at UMS at 1-800-832-1488.
Finally, I’ll be on the road tomorrow in Illinois. If you are in the area, come, the door is always open. For details just hit this link to our Web site to see upcoming seminars.
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