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A good week turns sour

08/24/2011 @ 8:25am

What started out as a positive week for the equity and commodity markets, turned negative in a hurry.  The Dow lost over 400 points Thursday leading to losses of 256.75 for the week settling at 10,990.81 today.  Oil followed the Dow lower, losing $3.89 a barrel to end trade at $81.48, as demand concerns remain in the market.  The dollar index rose sharply as did gold.  The precious metal set new all-time highs on its way to gains of $81.40 finishing trade at $1,827.50.  The late week sell-off affected commodities too.

Corn has set several new all-time highs and settlements this week, but is down 1 ½ cents as of Thursday ending trade at $7.13 on the December contract.  Production concerns remain in the market providing underlying support for the time being.  Some new yield information will hit the market next week as the ProFarmer crop tour gets underway on Monday.  Exports were reported as 902,500 MT, which is down 5 percent from the previous week and down 1 percent from the prior 4-week average.

Soybeans were the leader amongst the agricultural commodities this week, adding 26 ¼ cents to settle at $13.61 on the November contract.  The oilseed continues to be range bound between $13 and $14 as it has for the last six months.  Pods are being filled for a majority of the crop, but moisture concerns are adding support.  Exports saw a slight up-tick at 190,700 MT, which is up 32 percent from the previous week and up 12 percent from the prior 4-week average.

Wheat is down 1 ½ cents on the week to end trade at $7.39 ¼, on the December CBOT contract.  Support is being lent to the market from production concerns stemming from low yields and fewer planted acres than anticipated for spring wheat.  U.S. wheat continues to struggle against world suppliers as it is believed to be overpriced.  A weaker dollar will help in this regard.  Exports were pegged at 646,200 MT, which is up 2 percent from the previous week and up 20 percent from the prior 4-week average.

A mostly positive week turned sour Thursday, as global economic concerns were the catalyst for another sell-off.  Production concerns are supportive for corn and wheat, but weakening demand will keep a lid on prices for the near future.  Several record highs were established for corn and gold.  Estimated yields will be reported from the ProFarmer crop tour next week, which could spark the market higher.

Spot corn basis continued to slide this week, down eight cents on average, across the country. Basis for spot delivery has now fallen 17 cents on average since August 1, with stretches of the Mississippi River North of St. Louis and the Eastern Corn Belt continuing to be areas of weakness. In both of these regions ethanol plants continue to put downward pressure on the cash market, with some ethanol facilities lowering basis by 15 cents or more just in the past week. A weak export market has given little support to basis out of the Gulf, but basis declines in this area were less than the national average – down just five cents.

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