Supply and demand report forces limit-down price activity
Jan 12, 2009
The reports came in negative across the board for corn and beans which lead to limit-down price activity. The corn number was at the top of our trade expectation of 1.79 billion, this along with producers’ need for cash flow should keep the March contract under $4.20 now until confirmation corn plantings are down and some type of solid weather problem. The corn market will close today with a very large pool of unfilled short orders. This should put the corn market down on project (A). Downside risk is difficult to judge now with the fund activity but the bullish expectation of inflation seems to have subsided for now. My suggestion now is to simply wait until the end of January to early February to start buying the corn market for a spring and summer market bounce. I would suggest you focus on the December 2009 futures.
I’ve been suggesting for some time now that we are entering a period of critical highs for beans. Today’s report I believe is the beginning of a long-term downslide to some very weak values this fall. Again, I strongly urge all producers to be aggressive in selling November 2009 beans. More than likely, a $9.90 or higher price is going to be touch and go right now. I expect day traders will be looking to sell a hard sell off in March beans on project (A) tomorrow. As we move into late-week trading, the amount of rainfall down south will have a lot of bearing on how big a bounce we get in beans.
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