Home / Markets / Markets Analysis / Crops get bigger

Crops get bigger

Agriculture.com Staff 09/03/2009 @ 2:36pm

This week the market has had to adjust to the idea that the corn and soybean crops are large and potentially getting larger. The frost-free forecasts (so far), the early results from the southern harvest and the big name analysts' estimates have all combined to send prices lower.

The pre-report private crop estimates so far have been big. For corn, the estimates have a "13" in front of the crop number. For beans, the USDA's August crop number of 3.199 billion bushels also seems small with the estimates gaining 70 to 100 million bushels. Large yields out of the southern/Delta bean harvest also seem to weigh on the market.

Adding to the bearish attitude, the stare-down over cash beans is apparently over. Yesterday, there were some hints that basis levels were weakening. This morning, before the 9:30 a.m. opening of trading, basis levels had lost 50 cents. It didn't take long during the day for basis levels to crumble another $1.00 or so.

With basis levels tumbling, the bull spread in the soybeans (long September and short November) evaporated as well. The bullish fireworks in this bean spread took place during the last week of August, with the spread rallying 75 cents in one week. There haven't been any deliveries, but the meltdown in cash beans has caused the spread to lose the 75 cents (and more) in only four days of trading this week.

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.

This week the market has had to adjust to the idea that the corn and soybean crops are large and potentially getting larger. The frost-free forecasts (so far), the early results from the southern harvest and the big name analysts' estimates have all combined to send prices lower.

CancelPost Comment
MORE FROM AGRICULTURE.COM STAFF more +

Farm and ranch risk management resources By: 07/07/2010 @ 9:10am Government resources USDA Risk Management Agency Download free insurance program and…

Major types of crop insurance policies By: 07/07/2010 @ 9:10am Crop insurance for major field crops comes in two types: yield-based coverage that pays an…

Marketing 101 - Are options the right tool… By: 07/07/2010 @ 9:10am "If you are looking for a low risk way to protect yourself against prices moving either higher or…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Cool Tools Christmas Edition: Craftsman Two-in-One