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Now what?

Agriculture.com Staff 08/15/2008 @ 6:52am

The pre-report fog has lifted and the market has become focused on the weather for the latter part of the growing season (increasing dryness in some Corn Belt areas plus the whole frost discussion).

Although corn pollination occurred with good crop conditions, some analysts are worried that patches of dry weather are showing up and grain-fill will be affected. In other areas, where there has been rain for much of the season, concerns include nitrogen loss, disease and frost.

As the growing season progresses, demand has also become more of an issue. This is something that seems to happen every year, yet catches some market participants off guard. On Thursday, for example, demand issues can be clearly seen in the price action of corn and soybeans.

For corn, the USDA reported strong export sales for new crop, as buyers respond to the massive price break. Export sales have really responded in the past few weeks to the lower corn prices.

So while corn prices continued their post-report rally, beans suffered some small chinks in the demand armor Thursday as export sales were quite dismal and the July NOPA crush report was also disappointing. So this week, export sales did not seem to respond to lower prices. The crush report covered the month of July when prices were higher, so it is evident to the market that higher prices do have an effect on end user demand.

These reductions in demand caused bean prices to be weak Thursday, although prices did rally substantially off the lows. Recently, export sales and shipments have been good so the market will look to make sure this week's report is a one week blip. On the China watch, that country did cancel some sales in the old crop position and buy some beans in the new crop slot. The amounts were both small.

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.

The pre-report fog has lifted and the market has become focused on the weather for the latter part of the growing season (increasing dryness in some Corn Belt areas plus the whole frost discussion).

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