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Harvest delays bring farmer-selling opportunities, analysts say

Agriculture.com Staff 10/23/2009 @ 2:37pm

CHICAGO, Illinois (Agriculture Online)-- Since early September, the CBOT corn futures market has jumped nearly $1.00 per bushel. How much higher will the corn market go with a continued rain-delayed harvest?

Well, it depends on who you talk with. But, one thing is for sure, the longer it rains, the more farmers and their market analysts worry about yield loss. As a result, more bullishness is built into the corn market.

Mike Krueger, Senior Analyst for World Perspectives from Washington, DC., and President of TheMoneyFarm.com, says the corn prices have a lot of upward potential.

"I don't think we've lost much yield potential from the wet harvest weather on corn yet. That could certainly happen if it stays wet and if one of these rain systems turns into snow, and that could be in next week's forecast," Krueger says. "Snow would be a game changer for corn."

Krueger adds that the weather is just the start of corn prices rising, the traditional farmer vs. end-user standoff has yet to come.

"What has happened is that we will not see a strong harvest selling push or much short-term hedge pressure on the market, because it will not be dragged out across a very wide area. Also, most end users came in to harvest even or short in anticipation of big bushels and lower prices. They are slowly being forced to cover needs at these higher prices."

Ron and Sue Mortensen, Advantage Ag Strategies, Ltd, market analysts, say the weather market will have challengers attempting to trump its impact.

"It (wet weather) should support the market until the (supply) channels are refilled. But there are two issues--exports seem rather dismal and farmers will have large drying bills to pay, forcing them to sell crop to generate cash to pay such bills."

Jim Bower, Bower Trading, agrees the corn prices should be well supported by the inclement harvest weather.

"How much higher corn prices go will depend on actual damage to crops not necessarily how long crop stands in fields, he says."

OTHER BULLISHNESS

The number of bullish factors for this grain market just keeps growing, analysts and traders say. For instance, some say a higher crude oil market is leading corn upward. Others say the short world corn stocks underpin the market. Also, U.S. exports are holding steady, supporting the idea that U.S. stocks of corn and soybeans are getting tighter. Many marketwatchers believe more ‘outside' investment money is flowing back into the commodities market due to a falling U.S. Dollar.

John Roach, Roach Ag Marketing, Ltd, says open interest and money flow into commodities has exploded in recent weeks, adding to the trend now firmly in place.

"Remember professional money managers must make profits each year and this one has been tough if you stayed on the sideline all year long. Nobody wants to be the last guy to go long when the momentum finally stops. Many analysts and traders will have you believing the grains are higher on the account of a plunging U.S. Dollar. The reality is this major weather problem has given professional traders something to make a bet," Roach wrote in his daily newsletter Friday.

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