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Forecasts create whipsaw markets

Agriculture.com Staff 05/31/2007 @ 2:42pm

There is rain in the forecast, including the possibility of rain in the drier parts of the eastern Corn Belt and the Southeast. The rally of the past few days makes this hard to believe, right?

Almost like clockwork, as soon as planting season wraps up, the first hot weather scare of the summer surfaces. There are hints of a high pressure ridge on some extended forecasts. These are forecasts that go out two weeks, so reliability is low. But the markets are on edge! Today soybeans rally up and make new highs by a few cents, corn prices hit new highs for the week and wheat spikes up as well.

While the closes weren't quite that exciting, corn prices are up 14 cents for the week for the July contract and 10 cents for the December contract. Wheat prices are up 15-16 cents. In contrast, soybean prices are down 5-6 cents for the week.

Wheat has been dealing with some additional bullish international fundamental news, as the Ukraine, a very dry spot, is considering a ban on wheat exports. Russia and parts of India are dry as well. The market is also nervous before US wheat crop estimates for June start appearing. With the USDA surveying farmers to get a better handle on harvested acreage, wheat prices react nervously. Once again, the world just does not seem to be able to grow a wheat crop that makes market participants comfortable with supplies.

One thing has not changed-the hot cash corn market. Pockets of hot bids exist in several places in the western Corn Belt, including Blair, NE. Some central Iowa locations also continue to show stronger bids. Farmers are still busy with fieldwork and the thought is that many are not in a hurry to sell the last of their inventory. The volatility since last fall has many content to see how the summer unfolds.

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.

There is rain in the forecast, including the possibility of rain in the drier parts of the eastern Corn Belt and the Southeast. The rally of the past few days makes this hard to believe, right?

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