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Pulled In two directions

Agriculture.com Staff 05/16/2008 @ 9:30am

The market has certainly not had an easy time of it so far this growing season. The weather has been cold and wet. It's a slow year of planting, but right now only the 5th slowest since 1990-so it's bad, but not awful. The recent weather, especially in the western Corn Belt, has traders believing the crops will get planted.

So, if supply concerns have temporarily receded from the top of everyone's worry list, demand still has many traders concerned. As everyone was reminded last Friday by the USDA, carryouts for both crop years are tight. With trendline yields, carryouts for corn and soybeans are likely to decline in the 08-09 crop year. Only wheat, with a much larger crop (versus last year's freeze damaged production) musters an increase in carryout.

The demand component that has everyone worried is exports. It is also the demand factor with the largest ability to affect price. The ever changing Argentine situation is a case in point. During trading, the market believed the Argentine president had taken a conciliatory tone, presumably to influence the farm groups to end their current strike. This was a large factor in the poor performance of soy prices Thursday. Just to keep everyone on their toes, after regular trading hours, it sounded like the strike will continue.

Volatility continues!

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 market has certainly not had an easy time of it so far this growing season. The weather has been cold and wet. It's a slow year of planting, but right now only the 5th slowest since 1990-so it's bad, but not awful. The recent weather, especially in the western Corn Belt, has traders believing the crops will get planted.

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