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The pendulum swings

The corn market has gone from believing the September report would show a larger production figure, to thinking it would be smaller, and back to thinking it could be larger. The pre-report estimates have a "something for everyone" feel to them. They are either side of the August number, and the range is very small.

Even though this is the second estimate of the season, with estimates in such a narrow range, there's a good chance for a surprise when the USDA report is released on Tuesday morning.

Corn futures prices have also been swinging in recent weeks. Short covering rallies, such as today's 5 cent move, happen periodically. The overall price range has been quite small. Since the August crop report, December corn futures prices have been in only a 15 cent range.

Soybean crop estimates are all larger than the USDA's August number--the question is by how much. There's a difference of 200 million bushels between the high and low estimates. Given how the soybean plant develops and the importance of seed size in yield estimates, the soybean market will not take the USDA's September number as the final word on the subject. But it's not a situation of high anxiety, given the large carryout numbers. Soybean prices have drifted down since the report, but the size of the move has not been great-about 30 cents.

It's really still the future-and the future demand for corn in particular-that is still of most concern to market participants. Complicating this puzzle is the fact that the projected demand growth is to occur over a three to five year timeframe, as ethanol plants come on line. Clues to how fast this energy demand grows each year are key.

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 gone from believing the September report would show a larger production figure, to thinking it would be smaller, and back to thinking it could be larger. The pre-report estimates have a "something for everyone" feel to them. They are either side of the August number, and the range is very small.

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