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Holding pattern

Agriculture.com Staff 03/23/2007 @ 7:05am

The corn futures market has turned more sideways this week in advance of the much anticipated March 30th USDA reports. The selling abated early in the week and the rebound of almost 20 cents off the lows has perhaps created a trading range as the market waits for next Friday.

In three weeks, corn prices dropped more than 50 cents, the largest pullback the market has seen since the major low in September. It reminds everyone that even during a demand-led bull market, trading can be difficult. For the long-term health of the market, it was good to have the fairly significant drop in open interest that has taken place over the past three weeks.

The markets have been concerned about wet weather during the upcoming planting season, although it is a little early. When the calendar flips to April, then weather will be more critical. It will take time to plant all those corn acres!

Meanwhile, the soybean market valiantly shakes off the excellent South American crops and maintains a long-term uptrend. The bull market of the week is in November 08 soybeans. In four days, the market is up 50 cents. It is hard to imagine such a move on a contract for delivery 20 plus months away. However, many are concerned that soybeans will continue to lose acres to corn in future years.

Everyone recognizes that the ethanol story is one that lasts more than a year. There is also a feeling that South American acreage needs to be expanded next year. Soybeans compete with sugarcane, corn, cotton and other crops, so prices must be high enough to make planting beans one of the better alternatives.

The corn futures market has turned more sideways this week in advance of the much anticipated March 30th USDA reports. The selling abated early in the week and the rebound of almost 20 cents off the lows has perhaps created a trading range as the market waits for next Friday.

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