This information is provided by Archer Financial Services, Inc. 800-933-3996.
After a quiet start to the week, the grain markets had an increasing amount information to digest as the week progressed.
The USDA Report on Wednesday was met with a mixed reaction by the grain trade. The corn production estimate was revealed over 300 million bushels higher than what the trade had been expecting. This led to a sharply lower corn trade following its release.
Although, the corn market was able to more than halve its losses by Wednesday’s close, mainly on the back of a sharply higher soybean trade, it still managed nearly double digit losses.
One of the bigger surprises in Wednesday’s report was the fact that they left the harvested acreage data unchanged, while many in the trade are arguing for a reduction in that figure North of one million acres. Skepticism of the harvested acreage data and expectations of further yield cuts aided in the corn market’s late week recovery.
The soybean market rallied sharply on Wednesday after the USDA released a soybean production figure lower than trade expectations. Many in the trade were hopeful that August rains would provide a yield boost to soybeans, yet that was not evident in the yield estimate on Wednesday.
General commodity buying appeared on Thursday and Friday of this week as the US Dollar plunged to its lowest levels in over six months. This action was the result of the Federal Reserve’s bold move to purchase $40 billion in mortgage-backed securities for an unspecified amount of time. This has increased inflationary concerns and helped the gold market trade to six month highs.
Inflationary concerns are a longer term feature in the grains and not likely capable of sustaining a continued grain rally in the short term. We expect that the corn market to be tightly range bound over the next several weeks, while soybeans will look poised to challenge its contract highs. We will look to extend corn hedges on rallies above $8.20 basis December corn and add to soybean hedges on a move above $18.00.
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