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Dull report causes excitement

Agriculture.com Staff 02/10/2006 @ 7:48am

his week's USDA supply/demand report was really dull and boring. True to form this marketing year, the reaction was anything but dull and boring. On Thursday, grains and soybeans opened a little higher, worked sharply higher in the first 15 minutes, retreated to steady and then rallied into the close. Fund buying was the main feature once again, as these funds once again added thousands of new long positions.

The USDA did make changes to a few demand lines on the reports and that was all. Corn use for ethanol was increased 25 million bushels. Soybean crush declined 10 million bushels and soybean exports were lowered 40 million bushels. This produced one of the few "wows" of the report—a potential record 555 million bushel carryout for soybeans. While some analysts expected these adjustments, the sheer size of the carryout, with the potential for another large crop in the fall of 2006, is breath-taking.

Buried in the world tables are numbers which suggest Brazil could overtake the US as the world’s number one soybean exporter. Many are familiar with the reduced U.S. exports to China and the European Union. Brazil has captured a larger share of these important markets and has the potential to grab the title of "largest exporter" if the trend continues.

Positive fundamentals in the grain pits continue to be strong corn exports and dry weather in many hard red winter wheat growing areas. Much of the rallies continue, however, to be based on a general bullish attitude towards commodities. Daily price action, at least in the short term, can be determined by whether fund buying surfaces during the two most liquid times of the day—the opening and the closing.

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.

his week's USDA supply/demand report was really dull and boring. True to form this marketing year, the reaction was anything but dull and boring. On Thursday, grains and soybeans opened a little higher, worked sharply higher in the first 15 minutes, retreated to steady and then rallied into the close. Fund buying was the main feature once again, as these funds once again added thousands of new long positions.

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