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How will we trade today?

Agriculture.com Staff 02/25/2010 @ 2:20pm

Some days the grain and soy markets trade based on outside markets and some days they trade based on a fundamental force more closely related to the actual commodity.

Today the outside markets and the actual fundamentals were in line and the result was a lower market. The US dollar was stronger (at least early in the day), the stock market was weak and crude was lower. So these forces would indicate a negative tone to the market.

In the case of the soybean market, the weekly export sales report had fairly low sales (239,100 metric tons) and the Census crush report showed the amount of soybeans crushed was less than anticipated. Basic ag fundamentals, therefore, were also negative.

Actually, the entire export sales report was pretty lackluster. Certainly corn exports can be lowered by the USDA in a future supply/demand report. Wheat exports could even come down a little, although the USDA has lowered wheat exports all marketing year long. More negative news tidbits to indicate lower trade!

Despite down days like today, there have been enough positive days to give the market a feeling that some sort of spring rally is beginning. Certainly there is a seasonal trend to make a bottom in February and then rally into April.

This year there is a legitimate concern with the cold and snowy winter. How long will this hang on? Corn acreage is forecast to be larger (and needs to be larger), so the market would be more comfortable if the weather were warmer. There is certainly a lot of snow cover, but it is concentrated in Iowa, Minnesota, and the Dakotas-at least states that are not the first to plant! The eastern Corn Belt is in better shape. It’s never too early in the growing season to start talking weather!

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.

Some days the grain and soy markets trade based on outside markets and some days they trade based on a fundamental force more closely related to the actual commodity.

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