Home / Markets / Markets Analysis / The aftermath

The aftermath

Agriculture.com Staff 08/14/2009 @ 7:00am

With the USDA reports out of the way, the market is left to trade weather and, especially for soybeans, demand. With one day to go, the August soybean and soybean meal contracts still look like a squeeze. Especially early in the trading session, August soybean prices were substantially stronger than November. By the end, both contracts were very weak.

Large premiums, like the soybean futures and cash markets currently show, tend to evaporate at the blink of an eye. In the case of soybeans, it could happen with a substantial change in Chinese behavior, a smaller than expected export figure, or, eventually, the smell of new crop beans being combined.

For the corn market, the USDA painted a fairly rosy picture yesterday, with increases in demand in all three categories feed, ethanol and exports absorbing much of the increase in production. It is only natural to increase demand in the face of such a large crop figure, but the livestock industry is so shaky, the USDA might be over doing it.

Or there is another way to look at it. Demand naturally increases with declines in prices. To get this kind of demand, corn prices may have to fall. Improving profit margins for ethanol and livestock caused by lower prices could result in the sort of demand figures the USDA has projected.

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.

With the USDA reports out of the way, the market is left to trade weather and, especially for soybeans, demand. With one day to go, the August soybean and soybean meal contracts still look like a squeeze. Especially early in the trading session, August soybean prices were substantially stronger than November. By the end, both contracts were very weak.

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.
Over-Arching Issues at the World Food Prize