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Summer market watch list

Agriculture.com Staff 06/19/2009 @ 8:57am

The list of market-impacting events is growing this year. First, the USDA will release its new estimate of U.S. acres on June 30th in the Acreage Report.

Growing conditions and yield do not matter if the seeds are not in the ground. This USDA acreage report is key for half of the supply equation. Look for a substantial increase in soybean acres and a reduction in corn acres. Although there is no analyst poll data yet, many feel a reduction of around one million acres of corn is about right. There will be a "preview" Friday, June 19th as Informa Economics will release their latest acreage numbers at around 10:30 a.m.

Secondly, demand destruction questions. Have these high prices (and additionally, low livestock/milk prices) caused reductions in demand? High prices ration use and the effect of high prices can last much longer than any supply shortage. Given the massive amount of money being lost in the livestock and milk industries, feed demand could be reduced for more than just the summer months. Reductions in feed demand can take years to rebuild.

Next on the 'watch' list, does the market think China's storage program is bullish or bearish? The incredible buying spree by China has been bullish for soybean prices this year. But remember the goal of the program is storage. This is not actual demand. It is not the same as feeding more hogs or more chickens or improving feed rations. Is China building its actual demand base or do exports revert to previous levels?

Fourth, the weather forecasts are being eyed. How many heat wave scares occur during the growing season? Assuming a hot weather pattern does not take up residence for a long period of time, these sorts of forecasts will provide bouts of volatility and potential selling opportunities.

As a miscellaneous reminder, overnight electronic trading hours will be extended beginning July 1st. Instead of stopping at 6:00 a.m. central time, trading will continue until 7:15 a.m. Then trading will resume at the normal 9:30 a.m. time.

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 list of market-impacting events is growing this year. First, the USDA will release its new estimate of U.S. acres on June 30th in the Acreage Report.

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