Don't view outside investment a negative grain market factor, analysts say
Remember a couple of years ago when outside money started pouring into the grain trade, derailing it from its relationship with traditional fundamentals? As economic uncertainty continues, that's starting to happen again.
That's the main message analysts say they took from USDA's monthly crop production and world supply and demand figures, released Tuesday morning. The reports show that while corn yields have suffered from poor harvest weather this fall, that crop will end up the largest it ever has in the U.S. Similarly, the U.S. soybean crop is seen breaking previous production records. (See more from USDA's Crop Production report).
Though there's a lot of uncertainty remaining in what's left of this fall's harvest -- which will likely extend into December in some parts of the country -- analysts see more price stability in grain futures contracts. And, amidst a lot of general economic malaise as the nation starts to take small steps out of recession, that makes futures an attractive buy for outside investors, says eHedger market analyst Gavin Maguire.