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Is the top in?

Agriculture.com Staff 07/10/2009 @ 12:04pm

We have had plenty of questions asking if the top for the corn and soybean prices is in. To put it bluntly: Probably. While weather can still become an urgent factor for this year's crop production, as mid-July approaches there is neither a forecast for extreme heat nor dryness. The livestock market continues to act as an anchor on grain prices as well.

Since the end of June, corn, wheat and beans have experienced selling pressure; the news on all fronts has been negative. From the outside, crude oil has now dropped over $10 per barrel and is approaching $60 after peaking over $70. The direction of crude oil has often been an indicator of the direction of grain markets. Wheat prices substantially rallied and then collapsed well beyond their contract lows, losing nearly $2.00 per bushel in a straight down crash. Better-than-expected yield results, as combines moved out of the dry regions of the South, were considered the primary fundamental factor pushing prices. As for corn and soybeans, if one looks back four weeks ago, every weather element that was needed to help move the crop along has fallen into place.

Corn planting once again went down to the wire. However, it appears that most of the acres that were intended to be planted did, in fact, get planted. Where dry conditions persisted in the western Corn Belt, which allowed for an early plant yet concerned farmers significantly, rain managed to move their crop along. Cool and wet weather in the central and eastern Midwest gave way to a fast warm-up and a chance for farmers to continue to plant corn and/or soybeans into mid to late June. Weather, along with uncertainty in the stock market and fund liquidation out of long positions as the market began to drop, all aided in the recent and harsh sell-off.

Is there hope? Sure, but it is very much diminished. Weather is always a factor, as will the idea of prices just going too low too quickly. World developments and outside markets could also come back into play. However, when stepping back from the market and looking at historical long term charts, the old saying is, "bull markets have long tails." Prices in all commodities are still high enough that they could lose ground. A general malaise over economic conditions, as well as better-than-expected crops, could keep prices under pressure. Stick with a defensive posture on this year's crops until the market or weather proves otherwise.

If you have questions or comments, contact Top Farmer at 1-800-TOP-FARM ext. 129 and ask for Bryan Doherty.

We have had plenty of questions asking if the top for the corn and soybean prices is in. To put it bluntly: Probably. While weather can still become an urgent factor for this year's crop production, as mid-July approaches there is neither a forecast for extreme heat nor dryness. The livestock market continues to act as an anchor on grain prices as well.

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