Published on: 12:17PM Apr 16, 2010
It looks like we might see the market move a little higher in the coming days. One simple reason is because the funds are starting to rev up their buying programs once again. I am absolutely certain they are trying to find ways to get long this market. We have had some significant gains as of late in energy prices, a recovering global economy and more and more talk about inflation and rising interest rates. This all points to increased fund buying.
On the opposite side of the fence, farmer selling has slowed dramatically. Farmers are busy trying to get into the fields to begin their planting. Selling and moving grain is not on their agenda right now.
You factor in more buying from the funds and less selling from the farmers and we have a recipe for higher prices. It is that simple.
I think this imbalance could continue to push the market higher at times during the next few weeks or at least until we can reach a level that peaks farmers interest or they have completed their planting efforts and can once again give some attention to moving more grain.
Don't be surprised if you continue to see the market rally some in the next few weeks with heavy fund buying and a little weather premium being added back into the price.
Ultimately I think we will still be heading lower unless we experience significant problems during the growing season. If you are behind on pricing or hedging these next few weeks may provide you with some opportunity.
Remember, we are seeing near perfect weather and fantastic soil moisture conditions across most of the Midwest, making it almost certain that the farmers are going to get planted the 88.798 million acres of corn the USDA has anticipated. The question now has to become will they plant even more?
Take advantage of some of the opportunities that the market may give us in the coming weeks.
Kevin Van Trump
Founder Farm Direction
Call or e-mail if you need some help or would like to talk more.