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Positives and negatives

Agriculture.com Staff 10/31/2008 @ 9:24am

The corrected USDA crop production report rippled through the market Tuesday morning and the bullish numbers were a factor for the first part of trading.

Then traders considered the bearish tone created with the revised supply and demand tables. For both corn and soybeans, exports were lowered (50 million bushels for corn and 30 million bushels for beans). In addition, corn feed use was lowered 50 million bushels.

In this economic environment, it is not surprising that exports were reduced. The fears of global recession and demand destruction are widespread. The ag markets will have to prove themselves. Market participants will have to see demand estimates stabilizing in order to become more comfortable that a bottom has been formed.

The corn and soybean charts continue to look like the charts of the stock market, with some influence from crude oil and the dollar. On Wednesday, for example, the limit up performance in corn was due to a sharply weaker dollar, a five dollar rally in crude and the fantastic performance of the stock market, which rallied like a rocket in late trading Tuesday.

Thursday’s trade is considering the same factors -in reverse. Crude is lower, the dollar is quiet, the stock market traded steady to slightly higher after a sharp rally overnight.

Plus the export sales report this morning had poor numbers for corn and wheat. In addition, the International Grains Council (out of the U.K.) raised their estimates of the world wheat and corn crops. Corn and wheat prices gave back some of their rally just on the sheer weight of these numbers.

Today's fundamentals for soybeans were much more bullish-an absolutely superb export sales number for soybeans. Thanks to China (and unknown destinations), sales were 1.457 million metric tons. A marketing year high, half the sales were to China and one quarter were to unknown. Shipments were also quite high, and China shipped as much as that country bought.

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 corrected USDA crop production report rippled through the market Tuesday morning and the bullish numbers were a factor for the first part of trading.

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