Grains closed mixed 6/02/09

Published on: 16:56PM Jun 02, 2009
July 09 Corn
449 ½
+ 3 ¾
Dec 09 Corn
472 ¾
+ 3 ½
July 09 Beans
- 9 ½
Nov 09 Beans
1082 ½
-3 ½
July 09 Wheat
669 ½
- 5
July 09 KC Wheat
- 7
July 09 Min Wheat
785 ½
- 9 ½
July 09 Meal
- 3.3
July 09 Oil

Corn closed higher, wheat and soybeans closed mixed. A lack of fresh news and some liquidation weighed on prices today, but the weak dollar once again helped prices recover late in the day. Most of the buying came in the deferred months today and this was probably in response to “investment” type buying. The differed contracts are discounted in both corn and soybeans. If you want to buy commodities because of inflation, buying these contracts makes the most sense. There are also a lot of people “bull spread” soybeans and this is unwinding as the funds begin to “roll” positions from old crop to new crop. Cattle and hog prices were sharply lower once again today, with hog prices closing “locked” limit down. With margins collapsing over the past several months- year, many hog producers are finally “throwing in the towel”. Cattle margins are also diving deeper into the red and this may be the next sector to be forced into liquidation. So, although I still believe grain prices can continue this rally, we need to realize the total “demand destruction” that is occurring. If the grains continue to rally from here, the chance that corn, soybeans and wheat will all make contract lows this year will also increase. The market is trying to ration demand before the crop is even finished being planted. Maybe we have to go a lot higher, I don’t know, but once we force enough end-users out, the market will have a large break.   I know that the dollar is weak and that grains are priced in dollars. However, cattle, hogs and chickens are also priced in dollars and are heading lower. If this relationship does not improve, it doesn’t matter what the dollar is worth.
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