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Corn harvest, still?

Agriculture.com Staff 12/04/2009 @ 8:26am

It feels a little like corn harvest. Wait, what month is it? The last 20 percent of harvest seems to be weighing heavily on the market, with an increase in cash sales and softer basis levels, especially at the Gulf. Export sales for corn are still anemic. There is competition from feed wheat and also from other corn exporters-Brazil and Argentina, for example.

Plus the poor quality of this year's harvest continues to make everyone nervous. Farmers are reluctant to put poor corn in storage bins for the winter. Elevators are reluctant to put poor corn in outdoor piles. At all levels, this has corn moving at a fast pace before quality suffers even more.

Wheat has some of the same export related issues. US wheat has not been competitive to Egypt (a major importer) for some time and overall, exports are lagging.

The most positive news item for wheat is the likely reduction in soft red winter plantings, due to the delayed fall harvest and wet conditions in the eastern Corn Belt. With planting done, it is no longer a major focus of the market. Perhaps a private acreage estimate which surprises wheat traders would make it an issue again.

Some things do not really change. On probably four out of the five days in a week, the key fundamentals for the grains markets continue to be the value of the dollar, crude oil, gold and the financial markets. On one day per week, old style grain fundamentals come into focus.

This week, for example, many expected another chunk of money to be invested in commodities at the beginning of the month. The weak dollar and strong gold seemed to go along with that thought. The grains and soy market even traded higher on Tuesday morning as it anticipated fund buying. But when market participants realized the money wasn't there, the tone changed and by the end of the day, prices were steady or slightly lower.

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.

It feels a little like corn harvest. Wait, what month is it? The last 20 percent of harvest seems to be weighing heavily on the market, with an increase in cash sales and softer basis levels, especially at the Gulf. Export sales for corn are still anemic. There is competition from feed wheat and also from other corn exporters-Brazil and Argentina, for example.

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