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Crop sizes, round II

Agriculture.com Staff 09/11/2008 @ 2:36pm

Tomorrow is the day many have been waiting for since the USDA last projected crop sizes back in August.

The average pre-report estimate is 12.15 billion bushels for corn and 2.95 billion bushels for soybeans. These numbers are both slightly lower than the August crop sizes estimated by the USDA and reflect concern about the effect of the dry August weather. Other concerns are lack of nitrogen, the lateness of spring planting, crop immaturity and yields in the replanted areas of fields.

There could be a situation, with fairly small crop sizes, where there are just not enough bushels to go around. This could be especially true for soybeans where strong demand could press carryout to under 100 million bushels. Corn may continue to show tightening supplies, but perhaps the corn market will not feel the same anxiety as soybeans due to the abundance of other coarse grains in the world, chiefly feed quality wheat.

What happens after the dust settles? With the upheaval in the commodity markets, including the sharp sell-off in crude and the rally in the dollar, old-fashioned demand is the most important thing to watch for regarding corn, soybeans and wheat. With so much economic turmoil, market participants need to see that buyers will not retreat from the marketplace. The state of the ethanol market is also crucial for corn because forecasts for corn grind vary so widely.

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.

Tomorrow is the day many have been waiting for since the USDA last projected crop sizes back in August.

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