My thoughts prior to tomorrow’s report.
Feb 09, 2009
It’s the day before the Supply/Demand report and the market is rallying rather hard today. It appears that the trade is more worried about the government stimulus program than increased carryover. Tomorrow’s report will be looking to balance increasing domestic supplies against the prospect of reduced global supplies, specifically Argentina. It seems to me everybody is beating the drum really hard to keep prices firm. My expectation coming out of the report is it will not be a dominant bullish or bearish report but a little something for both the bull and bear to chew on. It’s too early to talk about weather scare, so I question what’s going to give this market direction over the next few weeks. My expectation before the report is it will be difficult for Dec corn to get back below $4 but equally very difficult to get back above $4.50. We are going to have see confirmation of weather before the market breaks out of either trading range.
As for soybeans, everybody with old crop beans to sell is hoping something positive comes out of tomorrow’s report to ignite the beans. Going in I’m not looking for much of a change. I assume everybody will be looking at the global numbers to see if things are getting much tighter. Looking over the next few weeks the only thing that I believe really can get things improving is if weather conditions gets worse down south. Second, if some type of dock strike occurs and temporarily drives prices higher. Granted the concern about inflation could keep old crop firm well into summer but our concerns are still quite high that a big acreage increase and slower global demand will keep the new crop prices on the defensive. A retest of the high $9’s we continue to believe is a low rather than a high probability.
Final comment: We are now in the crop insurance season. We realize it’s a big financial expense but taking out an 80% CRC crop insurance program on beans could really give you a solid financial reward. By having the insurance in place and then selling the cash the potential for returns will be huge. If you have any questions about crop insurance give Rowland a call here at UMS at 1-800-832-1488.
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