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And now we wait

Agriculture.com Staff 06/26/2006 @ 8:43am

Rain has fallen in some parts of the Corn Belt. Temperatures have eased. And a batch of USDA reports will be released Friday.

With prices off their highs (30 cents for corn and 20 cents for beans), this may be the market's pause that refreshes before volatility resumes in the crucial July/August timeframe.

The upcoming acreage report still seems to be gathering a lot of attention, simply because everyone wants to know just how tight corn supplies could get over the course of the coming year. Private estimates have provided the market some answers, but there is still uncertainty. Of course, with the corn crop not yet pollinated, acreage will not answer all questions. But a couple of million acres does provide relief in the face of projected increasing demand in 2007.

There are two commodities which have attracted interest because of high energy prices and alternative fuels-corn and soybean oil. Ethanol right now is more widely discussed and, since it is a more established industry, more is known about the industry's effects on future corn supply and demand.

There is more uncertainty about the amount of soybean oil to be processed into biodiesel in future years. But soybean oil prices have been strong due to this alternative fuel story. This translates into higher prices than one might expect for soybeans. Plus soybean prices right now can also be considered supported by high corn and wheat prices. In spite of current large soy supplies and slow exports, it is hard for soybean prices to move substantially lower.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

Rain has fallen in some parts of the Corn Belt. Temperatures have eased. And a batch of USDA reports will be released Friday.

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