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Role reversal

Agriculture.com Staff 04/23/2009 @ 3:31pm

It's been a long time since old crop beans were the weakest of the main grain/soy contracts. Wheat and corn futures were much stronger than soybean futures today. By the end of the day, old crop beans were actually down 7 cents, with corn up 7-8 cents and wheat up 12 cents.

After the first hour of sharply higher trading this morning, there was also a round of profit taking on the soybean bull spread. A popular trade over the past few weeks and months has been to buy July beans and sell November beans. So today, traders have been unwinding that by buying November beans and selling July. Bean futures also took a hit due to a round of corn/soybean spreading-traders were buying corn futures and selling bean futures. This also could be profit taking, as the soy rally has outpaced corn this spring.

If the market was more concerned about the weather, weakness in November beans would be more pronounced. In the back of many people's minds is the thought that corn yields did remarkably well last year in spite of the delays. So this year, it is hard to get excited about planting delays.

Plus, this week, everyone is not stuck in the mud. Many places in the Western Corn Belt are going full throttle so corn planting could be close to last year's pace when the USDA reports on Monday afternoon.

The soybean market certainly did not move lower due to an obvious change in old crop fundamentals. Export sales (for beans and soy oil) were strong and the Argentine crop size continues to decline. But the simple fact that there was nothing really new to report on these topics may have caused the profit taking. After all, remember the saying--a bull needs to be fed every day.

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.

It's been a long time since old crop beans were the weakest of the main grain/soy contracts. Wheat and corn futures were much stronger than soybean futures today. By the end of the day, old crop beans were actually down 7 cents, with corn up 7-8 cents and wheat up 12 cents.

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