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Ron and Sue Mortensen: Seismic change

Agriculture.com Staff 01/22/2010 @ 2:42pm

The shift in attitude due to the January USDA reports will likely last for quite awhile. The worrisome question "can we grow enough?" has been put on the back burner until the net major weather issue surfaces. For if US crops were so big with the cool, wet conditions of 2009, what could happen in 2010?

The shockingly low wheat acreage also helped answer the question "can we grow enough?" The reduction in CRP acres plus the low wheat acreage means that there are more acres than previously imagined for the growing of corn and soybeans -- maybe 9 million more. It is now possible for market participants to imagine adequate corn acreage to meet the demand for increasing amounts of corn to grind into ethanol.

Finally, it appears that the rest of the world will help add to the crop supply cushion. Crops in South America (both soybeans and corn) continue to look good. Especially for soybeans, analysts seem to be increasing their estimates of crop size.

Since the anxiety level is greatly reduced from the start of the year, and the first round of 2010 fund buying is completed, what can change the tone of the market? Surprises. Right now surprises would be mainly weather -- a very dry finish for South American crops, for example. Or it could be the opposite -- another wet spring around the Midwest.

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 shift in attitude due to the January USDA reports will likely last for quite awhile. The worrisome question "can we grow enough?" has been put on the back burner until the net major weather issue surfaces. For if US crops were so big with the cool, wet conditions of 2009, what could happen in 2010?

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