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A market shift is coming, analyst says

03/22/2013 @ 8:43am

It’s almost here--spring planting!  The shift in interest from old crop to new crop is well on its way.  Next week’s USDA reports, which include prospective plantings, will help focus traders’ attention on the new crop situation. 

There has been corn planting in the far south--think Texas and Louisiana.  However, a little farther north, it has been generally too wet to plant.  With the need for early corn given the current tight supplies, this is unnerving the market.  There have also been comments about farmers switching from corn to cotton.  Cotton prices have been moving higher for months, due to strong demand from China.  The cotton charts do look very different from the corn, wheat and bean charts!

The main Corn Belt is still suffering from below normal temperature and snow cover.  Even though it is still March, farmers and traders are realizing 2013 is a very different year. 

Next week’s reports will also provide March 1st stocks numbers.  More and more people are wondering if corn stocks will be smaller than previously thought.  This topic of discussion has been “trending” since the supply/demand report on March 8th, where the feed/residual use for corn was increased.  A change in feed use before a stocks report is unusual. 

Given the concern regarding corn for several weeks, the soybeans have been taking the back seat during the same time.  Although shipments are not going extremely smoothly in Brazil, they are improving.  The US has seen a corresponding decline in soybean sales and shipments. The bounce on Thursday was once again driven by thoughts the Chinese could return to the US to buy additional old crop beans, as well as technical factors, with the market raced back above several key moving averages. 

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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.

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