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Corn bears resurfacing

11/14/2013 @ 2:54pm

The futures market breathed a sigh of relief last Friday after seeing the numbers from the USDA. Crop sizes were close to what the market expected, so they were not the huge numbers some had feared. 

With the USDA suggesting robust demand, market action last Friday and early this week was very positive. In the corn futures, shorts took profits when the supply/demand tables did not have a carryout greater than 2 billion bushels. The rally lasted two and a half days, and then prices retreated. 

Besides the carryout, the market learned that yields were surprisingly strong, plantings were down around 2 million acres, and the government increased its projections for exports and feed use. 

Now the bearish fundamentals seem to be resurfacing: potentially larger crop size in January, massive increase in crop size between last year and this year, potential farmer selling of the last bits of harvested corn, and no serious weather concerns in South America. 

Soybean price action continues to be much more positive. Export inspections of 80 million bushels per week will do that to the market. China also continues to be very active in purchasing U.S. soybeans. 

The soybean market is at a different point in time than the corn market. The corn market got a large enough jump in supply to see a comfortable carryout. Soybeans are again waiting until next year to potentially increase carryout. This supports soybeans in comparison to corn. 

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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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