Bulls Simply Taking a Break
Oct 18, 2010
I was on the U.S. Farm Report this weekend with Gregg Hunt. If you did not see it, you may want to check it out online (Oct. 16-17 episode). Bottom line, all end users who do not have next year’s inventory locked up need to have something done as soon as possible.
We view today’s selloff as a time period when the bulls are simply taking a break. The real fireworks are just around the corner when contracts in the December corn will have to be rolled to the March to avoid delivery. Talk is already there suggesting potentially in excess of a million contracts held by the trading funds may have to be rolled forward. A lot of supply uncertainty still has to be resolved in the first part of January and questions still exist regarding how high prices have to go up to ration ethanol and exports. We would suggest end users need to be buying December corn at the current price range.
In regards to soybeans, we still believe yields are going to improve eventually but this will be offset by strong export demand as we have been seeing in the weekly numbers. This means all eyes will be on South America. There are still some dry areas but its still very early. If things don’t change by Thanksgiving bean prices could be very strong next year. We would encourage all meal users to not fight the trend, get inventory locked up.
In summary as discussed on this week’s U.S. Farm Report the potential for explosive markets exist for the first part of 2011. This is going to put a lot of responsibility on the producer to have a well thought out selling campaign for 2011 and beyond. We are putting the finishing touches to our comprehensive selling review, it’s free to clients but a $75 for all non-clients. Just call at 1-800-832-1488 for details.
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