For the most part, the corn and soybean markets continue to trade in a sideways pattern. Bean futures are holding support at $6.00, while $6.50 to $7.00 continues to hold as resistance. December corn is holding in a general pattern between $2.28 and $2.40. Corn planting progress is running above the five-year average. Expect more of a sideways price pattern near term, as the market waits for more price-altering weather.

Typically, if planting goes well, both corn and soybean prices weaken by the second week of May. If weather remains conducive, prices will move downward through mid June. Historically, the futures market has a tendency to get ahead of itself. When the crop is young and carryout large, the market assumes that weather for the remainder of the year will be a non-event.

If prices do cheapen further by early summer, this will be an opportunity to re-own sold grain. This will also be the time for end users to aggressively secure long term needs prior to the most important weather for crops.

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Besides weather, other variables that may impact prices this year are a weaker U.S. dollar and significant speculative fund money that is finding a home in commodity markets. The CRB Index, a basket of commodities, reached 25-year high levels this year.

The grain markets, especially corn, have yet to see much fund buying, compared to some other commodities. That is probably due to mostly negative near-term fundamentals. As summer approaches, however, and more meaningful supply-altering weather comes into play by mid June, prices could see big volatility, in part due to more dollars trading futures.

We encourage producers to prepare for the lower prices. Assume normal weather and production. This means selling spring rallies or getting more aggressive if prices show signs of weakness. To cover sales, we encourage you to use "safety valves", which are out-of-the-money CALLS.

After record crops last year, a repeat is unlikely. Therefore, any weather threat, whether real or perceived, could send prices dramatically higher. Bottom line, weather will dominate the price picture in the months ahead and allow for more price decline (30 to 40 cents in corn and $1.00 to $1.50 in soybeans) or a significant rally.

If you have questions or comments, please call us at 1-800-TOP-FARM ext. 129.