USDA takes the sting out of corn planted acres!
Jun 30, 2008
Going into the report, our expectation was for it to be a disappointment. Well, it was with 87.3 million planted acres. USDA took some of the sting out of the number by reducing the harvested percentage down to 90.3 billion bushels, which is normally around 92%. This accounted for about an 1.7 million acres loss or about ½ of the expected flood damage. One should now expect a lot less bullish news coming out of the August report. I still expect another 1 million or so acres lost but it’s not going to be enough to make the August report explosive. While there are several other factors at work I would suggest these are the big ones for now. As I’ve been suggesting, the market going to go into a consolidation phase. Right now we are seeing profit taking and panic selling.
From here on in the major players will be:
1. Will the western heat move east? Since a lot of the crop is late, could we see dry weather right during pollination?
2. My greater concern is the lateness of the crop. Will it put a lot of pressure on the maturity of the crop into harvest? Is there any potential of early harvest problems?
3. Will the government move forward on its concern about the heavy interest of outside money investing in commodities? I believe its coming. The problem is there is a lot of money at risk for the exchanges and once you start how much do you want restrict the market?
4. Finally, will oil continue to rally and overpower all the bearish fundamentals? Could we see a big blow up in the Middle East over Iran weapons before President Bush goes out of office?
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While there are several other factors at work I would suggest these are the big ones for now. As I’ve been suggesting, the market going to go into a consolidation phase. Right now we are seeing profit taking and panic selling.
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