Home / Markets / Markets Analysis / Summer heats up

Summer heats up

Agriculture.com Staff 07/03/2008 @ 1:24pm

The summer is just getting started in some ways, as Monday's USDA reports provided some answers regarding spring plantings and spring grain demand. Now the market is in summer weather mode.

The upcoming summer weather will be very important to the corn and soy crops. Just mentally file away yesterday's market action—and expect moves like that to happen again. Granted, short-covering was featured yesterday, as the market completely digested the acreage and stocks reports. But add in a whiff of hot weather in the forecasts, and boom, corn prices were up the limit.

Bearish weather forecasts will occur this summer and the reaction is likely to be as violent to the downside. It may be hard to keep track of all the little influences on market price.

For soybeans, never mind little influences. The big influence continues to be China. This morning's export sales report showed buying by China of old crop soybeans. The supply/demand tables for soybeans are very tight and small changes in export demand have had (and will continue to have) big impacts on price.

For an added touch of market volatility, the USDA may announce a decision regarding CRP acres as early as next Friday (after the July wheat crop report and July supply/demand report). The belief is the USDA will allow penalty-free early-outs for acres with the lowest Environmental Benefits Index. How many acres, exactly how this is structured, the location of the acres and the timeframe for decision making will be important.

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 summer is just getting started in some ways, as Monday's USDA reports provided some answers regarding spring plantings and spring grain demand. Now the market is in summer weather mode.

CancelPost Comment
MORE FROM AGRICULTURE.COM STAFF more +

Farm and ranch risk management resources By: 07/07/2010 @ 9:10am Government resources USDA Risk Management Agency Download free insurance program and…

Major types of crop insurance policies By: 07/07/2010 @ 9:10am Crop insurance for major field crops comes in two types: yield-based coverage that pays an…

Marketing 101 - Are options the right tool… By: 07/07/2010 @ 9:10am "If you are looking for a low risk way to protect yourself against prices moving either higher or…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Are We In a Climate Change?