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Markets claw back

Agriculture.com Staff 02/01/2008 @ 8:01am

Corn and soybean prices continue to claw back from the limit down close on Wednesday, the 23rd. Several times since then, significant selling during the morning has been met with buying that stabilizes the markets and gives participants confidence in buying. Consequently, corn and soybean prices will end January almost exactly in the middle of the monthly price range.

Basis levels have also snapped back. The price break after the January crop report flushed out cash supplies and now the pipeline is drying up. With no big news on the horizon, basis levels have needed to improve to attract adequate cash movement.

The markets will have slim pickings in the near future for news. Estimates of Brazilian and Argentine crop sizes will attract attention. The rainfall in northern areas of Brazil, like the main soybean state of Mato Grosso, will cause concerns about soybean rust and delayed harvesting. This means there is the potential for US beans to compete in the export market for longer than originally thought.

For farmers, there is good news-February is just ahead and average prices for many crop insurance products will begin calculating. Simply knowing the possible levels of coverage will help reduce anxiety caused by high input costs. It has been hard to apply fertilizer, buy seed and chemicals, plus get ready for March 1st (income taxes and cash rents) without some idea of what crop insurance will cover. While crop insurance is not a substitute for marketing, it does help quantify a farmer's risk and is definitely a piece of the risk management puzzle.

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.

Corn and soybean prices continue to claw back from the limit down close on Wednesday, the 23rd. Several times since then, significant selling during the morning has been met with buying that stabilizes the markets and gives participants confidence in buying. Consequently, corn and soybean prices will end January almost exactly in the middle of the monthly price range.

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