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Weather forecasts grip the markets

Agriculture.com Staff 07/13/2006 @ 4:18pm

It's a weather market for corn and soybean futures. The market hangs on every forecast and prices swing with every little change-hotter, drier, wetter, cooler. It's corn pollination time in the heart of the Corn Belt and its also the hottest point in the season-the last half of July.

Marketing is difficult at this time. It can be emotionally draining, especially if worries about the size of your crop compound worries about margin calls and volatility. Going into the weekend, buying call options could be a logical step to protect your sanity. They are very expensive, but sometimes options can be worth the money, if it means a good nights sleep. There is nothing that says they must be held until expiration. Sometimes they only need to be held over the weekend!

Sometimes, even in summer weather markets, outside influences come into play. Wheat futures, particularly Minneapolis and Kansas City, have set contract highs on concerns regarding the spring wheat crop. With temperatures as high as 105 degrees, its no wonder there is a separate weather market churning in the various wheat pits. Rain and rain chances may not "fix" the crop, but long liquidation in the face of radar returns is apparent. Today, speculators ran for the exit doors, and wheat futures were down 20 cents or more. These large losses undoubtedly pressured corn and soybean prices as well.

The mornings export sales report also did little to provide a bullish flavor. While soybean exports were in the range of expectations, wheat and corn were disappointing. Corn sales were only 669,000 tons (old and new crop combined), way below the totals seen in past weeks. The USDA supply/demand reports, released yesterday morning, also became old, unimportant news.

It's a weather market for corn and soybean futures. The market hangs on every forecast and prices swing with every little change-hotter, drier, wetter, cooler. It's corn pollination time in the heart of the Corn Belt and its also the hottest point in the season-the last half of July.

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Weather Trumps Demand