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Corn market swirls

Agriculture.com Staff 08/02/2007 @ 2:12pm

The corn market has been swirling up and down this week, as it tries to absorb news regarding crop size, exports and weather. Price ranges on several days this week have been large and emotions have swung from bullish to bearish and back again several times.

Exports have been huge the past few weeks, including 1.776 million metric tons in this week's export sales report. Foreign buyers definitely took advantage of the lower prices available in July. With that sort of end user buying in the market, further selling may be discouraged, as it appears prices have found some sort of fair value.

The first private estimate of crop size was released yesterday afternoon. FCStone put a yield of 148 bushels on the corn crop, for total production of 12.644 billion bushels. This is probably smaller than many in the market were thinking. It seems like many analysts had been embracing a trend or better concept, something around 150 to 156 bushels.

It is believed Informa Economics will release their crop estimates tomorrow morning. This will help tell market participants whether or not the first crop estimate is too extreme, or the real deal. Other estimates will surface, but these are the most important. The most important USDA estimate comes on Friday morning, August 10th.

The idea that yields may be trend or below could have long lasting implications. First, the supply/demand situation tightens for corn, leaving carryout closer to that psychologically important one billion bushels. With smaller carryout, ensuring adequate acres in 2008 becomes more important. Prices for December 08 corn futures will continue to be strong. Finally, it means soybeans may have more difficulty attracting 2008 acres.

Crop estimates aside, the most important thing on many people's minds is still the weather. The forecast for the weekend contains rain, at least for the northern part of the Corn Belt. This summer, weather forecasts on Thursday and Friday seem distinctly different than the forecast on Sunday night, leaving many unwilling to take a big risk over the weekend.

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 been swirling up and down this week, as it tries to absorb news regarding crop size, exports and weather. Price ranges on several days this week have been large and emotions have swung from bullish to bearish and back again several times.

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