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Market reacting

Agriculture.com Staff 02/12/2016 @ 1:49am

With tight domestic and world inventories, adverse weather has had a sharp impact on grain prices in recent weeks.

As of Friday, the September Chicago wheat futures rallied nearly $1.50 in a mere three weeks. Wet conditions are hampering harvest and promoting disease issue. That, along with a frost this spring and dry conditions in parts of the eastern Midwest, have all helped to push wheat prices to their second highest price in 10 years. As for corn, prices continue to find support on growing dry weather issues in the eastern Corn Belt as well as spots of too wet in the western area.

Both the corn and wheat stocks-to-usage figures are at 25 to 30 year low levels. Given increase in world demand and a more global market, the sensitivity to weather events, whether here in the U.S or abroad, may quickly be magnified in the futures market, which has seen an influx of significant speculative money in the last half decade.

Fund money continues to pour into row crops anticipating that weather issues, as well as strong long-term demand, will provide underlying support. Therefore, the most recent weather events have had a magnified effect on prices as the markets have wasted little time perceiving crop condition concerns.

The apparent lesson that the futures market is telling us in recent weeks, is that the market is and will continue to be sensitive and volatile. Both producers and end users should be prepared for this volatility and be in a position to execute marketing strategies to offset their risk. Be an expert at your marketing tools or talk to someone who is. A few small ideas could generate significant strategies that could help keep you in business.

If you have any questions or comments, please contact Top Farmer at 1-800-TOP- FARM, ext. 129.

With tight domestic and world inventories, adverse weather has had a sharp impact on grain prices in recent weeks.

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