Funds Active Sellers of Corn and Beans Since Sept. 1

September 9, 2011 01:15 AM

What Traders are Talking About:

* Fund selling continues in corn, beans. Funds sold another 13,000 contracts (65 million bu.) of corn and 4,000 contracts (20 million bu.) of soybeans Thursday. Since September 1, funds have sold a net 30,000 contracts (150 million bu.) of corn and 16,000 contracts (80 million bu.) of soybeans.

The long and short of it: As long as funds are active sellers, there's more downside risk in corn and bean futures. But once funds flip the switch to "buy" again, it will become much easier for corn and soybean futures to strengthen.

* Chinese inflation eases, economic activity slows. China's CPI slowed to a 6.2% over year-ago in August, down slightly from the 6.5% increase in July, which was a three-year high. Food price inflation at +13.4% accounted for 4 points of the overall inflation total. Pork prices rose "only" 45.5% in Aug. after surging. nearly 57% in July. China also announced second quarter GDP came in at 9.5%, down from 9.7% in the first quarter and 10.4% for all of 2010.

The long and short of it: The combination of slightly milder inflationary pressure and slowed economic activity suggests China is likely done with the monetary tightening.

* Macro focus on global economic slowdown. Finance ministers and central bankers from the G7 economic powers, along with International Monetary Fund chief Christine Lagarde, are meeting in Marseille, France, today with a focus on trying to stem the tide on the global economic slowdown. Yesterday, the Organization for Economic Cooperation and Development (OECD) revised sharply down its growth forecasts for the rest of the year for G7 nations. OECD says U.S. growth is set to be much weaker than previously forecast at 1.1% in the third quarter and 0.4% in the fourth quarter, compared with forecasts of 2.9% and 3% at the end of May. Also yesterday, the European Central Bank shifted its stance and held interest rates rates steady at its policy meeting, saying inflation risks are no longer skewed to the upside and that economic growth in the region will be slow at best. That has many traders now expecting the ECB to cut rates by the end of the year.

The long and short of it: The global economic slowdown is a factor for grain and soy futures in that it could impact investor attitudes. And speculative money flow is still very important to price direction in grain and soy futures.


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