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Ron and Sue Mortensen: Rallies continue

Agriculture.com Staff 04/11/2008 @ 6:20am

The corn market certainly has some solid underpinnings from the demand side of the equation. The amount of corn feeding revealed in the grain stocks report last week caused an upward adjustment in price expectations. Plus export sales are much stronger than many expected.

Add in some wet, cold weather. That's just one more reason on the list that the corn market has rallied. Remember the acreage report practically screamed "plant more corn" so prices need to encourage farmers to be patient and wait for dry weather. And if prices would encourage a farmer to order some additional fertilizer and seed to plant another field to corn, that would be even better.

So what happened with about five minutes to go before yesterday's (Thursday's) close? There is always a certain amount of "profit taking" that is discussed when the market breaks. But there are also jitters about the next forecast, and whether or not it will be warmer and drier, so traders may be reluctant to carry positions overnight. Plus, some may say it's close enough to the weekend to simply close out positions and be done trading. No matter what happens to corn prices longterm, whenever the market embraces a forecast for decent planting weather, there will be a price break.

Soy prices may not be on their highs like corn. But the recent rally is very strong and based on a variety of factors. The weak dollar, the recent Argentine farmer strike and the Brazilian port strike all cause traders to realize soybean exports could continue to grow. A strong export number this morning supports these concerns. Plus soybean prices seem to want to participate in this spring's acreage battle--every commodity needs to fight to hang on to whatever acres it can get!

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 corn market certainly has some solid underpinnings from the demand side of the equation. The amount of corn feeding revealed in the grain stocks report last week caused an upward adjustment in price expectations. Plus export sales are much stronger than many expected.

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