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CBOT's Dec corn reaches new contract highs

Agriculture.com Staff 11/20/2006 @ 12:15pm

As the market beat contract highs on Monday on the Chicago Board of Trade, producers were encouraged to consider pricing some new crop corn and Dec '07 corn in increments.

During Monday morning trading, the CBOT Dec futures contract reached $3.72 per bushel, topping its previous high of $3.67.

Because of a tight U.S. supply/demand picture for corn, a lot of unusuals for this fall's market are occurring, allowing producers sales opportunities.

Essentially, the corn market is trying to find that 'appropriate place' to hold down the demand of ethanol and other worldwide uses, according to Barry Schmidt, independent floor trader with the Iowa Grain Company.

"Every week I continue to hear there is a new ethanol plant coming on board," Schmidt said. “I think we need to get the corn market to a point where we can stop that. The more corn goes up, I think we'll get to that point."

Even though some believe that "appropriate place" could be in the $4.00-$5.00 per bushel range, producers are being urged to take some profits.

On Monday, John Roach, Roach Ag Marketing, Ltd, alerted farmer customers of a sell signal on corn. Even though Roach advises not to sell during this time of the year, the profit levels this year are reaching levels producers shouldn't ignore, he said.

"Keep your quantities small, and your sales so that you can take advantage of the prices over a longer period of time," Roach said.

With stronger futures prices, basis levels are narrowing, giving producers some of the best cash corn prices in 10 years, Roach said.

For example, cash bids ranging from $3.20-$3.70 were being reported on Monday.

Meanwhile, producers should avoid letting daily news determine whether to buy or sell, Roach said.

"The daily news will have you buying the highest price not selling it," Roach said. The news of China stopping corn sales is not overly significant, but it is indicative that world supplies are tight. We've known the world supplies are tight. It didn't happen overnight."

As the market beat contract highs on Monday on the Chicago Board of Trade, producers were encouraged to consider pricing some new crop corn and Dec '07 corn in increments.

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