Market action in the past few days can be summed up with two ideas: 1) what will the next weather forecast say? and 2) what will the August crop report say? There is still a strong supply focus in the market.

The blast furnace heat in the forecast has some on edge, especially in the Delta and drier areas of the Corn Belt. But until market participants hear a few estimates of crop size, there is not a huge concern about the hot weather, since it is not currently forecast to become a permanent feature. Crop conditions are considered good enough to not be really affected by two to four days of heat.

Sure, there have been other market influences this week. The USDA decision to not offer early release for CRP acres caused the biggest reaction in '09 futures prices for corn and soybeans. The fight for acres is on, as CRP acres will not be able to provide any supply cushion in the future. With the tight stocks situation that has developed over the past years (only wheat has seen any relief so far), each commodity needs to make sure there are adequate supplies.

The USDA weekly export sales report showed solid exports for pretty much all commodities. The relative price stability of the past week and a half has encouraged buyers to extend coverage and/or buy the last amounts required before harvest.

Actually, with late plantings and potential late harvest, both foreign and domestic buyers may have to scramble for supplies in September and the first part of October. This is especially true for soybeans, which seem poised to end August with barely pipeline requirements. It would also seem likely bean stocks are located in the western Corn Belt, leaving the eastern Corn Belt with the biggest problem and the biggest potential basis volatility.

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.

Market action in the past few days can be summed up with two ideas: 1) what will the next weather forecast say? and 2) what will the August crop report say? There is still a strong supply focus in the market.