Weather, Price Pressures Dominate Markets

May 25, 2012 10:13 AM
Weather, Price Pressures Dominate Markets

This information is provided by Archer Financial Services, Inc., 800-933-3996.



It was another volatile week in the grain markets with price pressure the dominating feature. The first week of the new 21 hour a day trading format apparently left traders in a bad mood.
The price declines began on Tuesday with both July corn and July soybeans closing over $.30 lower for the week. Tuesday’s weakness was largely based on widespread global economic concerns that lead the U.S. dollar racing to its highest level since September of 2010.
Greece’s status in the euro zone continues to be watched closely by the markets. July corn accelerated its slide on Thursday on a weakening basis based on slowing export demand as well as a projected increase in global corn carryover of 6 MMT by the International Grains Council. Rumors of potential corn imports from Brazil will likely prove to be unfounded.
Widespread declines in soil moisture continued this week as rains were largely limited to the Northern Plains. The two major weather models have been at odds for most of the last two weeks as the US model favors more normal temperatures and precipitation, while the European model has a more stressful forecast for U.S. crop production. The forecasted rain events for next week are critical to staving off early season production concerns, as both weather models seem to be hinting at the return of ridge building into early June.
Global economic concerns are a reality that will not be going away anytime soon. The key will be how quickly that issue can be pushed from the headlines by U.S. grain supply and demand fundamentals. That may very well occur beginning next week. Except for a small hedge in new crop corn we have moved to the sideline with hedges this week. We will be looking to advance new crop sales on a move in December corn above $5.40 and as November soybeans approach $13.50.
As we enjoy the great weather this weekend, may we also take time to remember those that paid the ultimate sacrifice for this great country!

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