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Corn market stalls out

Agriculture.com Staff 01/29/2007 @ 7:03am

The corn market has stalled out since the day after the January crop report. It is awkward that there will really be no great fundamental news for the corn market to chew on in the near future. The market could be vulnerable to technical buying or selling, which could produce big swings in price with no underlying fundamental explanation.

The market has seen a reduction in index fund positions, but that has been countered with additional (old style) large speculative longs, as well as buying by the small speculator. The commercial is the short in the market, reflecting the substantial amount of farmer selling that has occurred. As that grain is moved in the marketplace, the commercial will buy back (offset) those positions.

As far as growing crops, both the Argentine and South African corn crops are currently in good shape, but a dry spell could attract attention. The Argentine corn crop is generally an export competitor, but these supplies are committed and there is a ban on further sales. A slight lull in US exports could occur, but really there is no other exporter with significant supplies besides the US.

The ethanol news has failed to excite the market in the past few days. Given the bipartisan nature of the push towards biofuels, perhaps the market will pay attention to the debate over President Bush's proposals. Although the market clearly had a "buy the rumor, sell the fact" attitude about the goal of 35 million gallons of alternative fuels by 2017, details about the mandate or discussion about how the ramp-up might occur could stimulate additional bullish attitudes in the corn market again.

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.

The corn market has stalled out since the day after the January crop report. It is awkward that there will really be no great fundamental news for the corn market to chew on in the near future. The market could be vulnerable to technical buying or selling, which could produce big swings in price with no underlying fundamental explanation.

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