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Report day

Agriculture.com Staff 06/09/2006 @ 8:09am

Though Friday is report day for the USDA, the market will probably be more interested in the acreage and grain stocks reports due out on Friday, June 30th.

The acreage report will be key in showing how much corn was planted, since supply is an ongoing concern in the face of increasing demand in 2007. The grain stocks report is key in evaluating feed use. It may be hard to have a big surprise this late in the marketing year, but analysts are interested in every little piece of data that shows how the increasing supply of DDG's, a competing feed product, is affecting corn and soybean meal feed use.

The corn and soybean market has been jerked around by forecasts in the past week. A whiff of hot and dry at the end of last week caused short-covering, but no new highs in corn and soybeans. Moderating forecasts have allowed prices to decline. With marvelous crop conditions in so many parts of the Corn Belt, it is hard to worry about damaging weather. As usual, the market worries that hot and dry will become a permanent feature, not a three to five day event. Pollination in the main Corn Belt areas is still weeks away.

Corn prices have been proportionately softer than soybean prices. Given the tighter supply/demand situation for corn, this is odd. Since the beginning of the "commodity obsession", corn prices have been more directly linked to metals and energy prices, given the concept of corn as an energy source. Perhaps these outside markets are still having an influence--metal and energy prices have been weak for the past month. Since the long speculative position in corn is larger due to the index fund phenomenon, the outside markets could be subtle contributors to the slide in corn prices.

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.

Though Friday is report day for the USDA, the market will probably be more interested in the acreage and grain stocks reports due out on Friday, June 30th.

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