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Back to the market grind

06/13/2013 @ 4:10pm

There is always a flurry of anticipation around USDA report day. And the five minutes after the report is released produces absolutely chaotic trading, even if the numbers are as expected or boring.  

Then the next day, traders are stuck asking, “Now what? What do we focus on?” This is especially true this week, as the USDA had really nothing to offer in terms of the fundamental questions of supply --acreage and yield.  

So, the focus goes back to things like export sales. Exports continue to be anemic for corn and have definitely tailed off for beans. Meal export sales are still large, but are also tailing off. Although not perfect, the effect on the market is one of seeing the light at the end of the tunnel. In this case, the end of the tunnel is the beginning of new-crop harvest.  

There is also some speculative liquidation taking place as traders must reduce the size of their positions close to the delivery period. Also,  July grain and soy options expire next Friday.    

If planting season is perceived to be generally over, then the market may limp along until the next news story grabs its attention. With pollination so far in the future, weather may not be the next news story. It could be demand, the price of old-crop supplies, or tidbits out of China. Or maybe something in the wheat market could catch traders’ eyes.  

Eventually, the market will care about acreage again. Perhaps at the end of next week, prereport estimates will begin for the acreage and stocks reports which will be released June 28. Estimates that are unusually large or small will begin to refocus traders’ attention on the incredible planting season of 2013.  

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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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