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Farm markets sell off

03/27/2012 @ 9:35am

DES MOINES, Iowa (Agriculture.com)--Unwinding of spread trades and profit-taking forces a lower close for the CME Group corn, soybean and wheat markets Tuesday.

The July corn futures settled 5 1/4 cents lower at $6.30 3/4. The July soybean contract closed 8 cents lower at $13.76 1/4. The July wheat futures ended 18 cents lower at $6.52 1/4. The July soymeal futures finished $1.60 per short ton lower at $376.80. The July soyoil futures finish $0.31 lower at $55.52. 
In the outside markets, the NYMEX crude oil is $0.26 per barrel higher, the dollar is higher and the Dow Jones Industrials are down 1 point.

Jack Scoville, PRICE Futures Group vice president, says the choppy trade is a lot about people leaving long positions in soybeans with little reaction to the China purchase.  

"Maybe that was the rally last night.  Wheat is in good condition, so selling is showing up there today. But, Minneapolis prices are holding better to encourage plantings.  Corn is just hanging around waiting for something but will not get much news until Friday most likely.  The big action is in the beans and seems to be selling tied to liquidation of the reports on Friday," he says.


Tim Hannagan, PFGBest.com senior grain analyst, says look for traders to unwind spread trades ahead of Friday's report. "Spread trading is expected to be big this week on several fronts," Hannagan says. 


One, the planted acreage report affects new crop December corn futures and new crop November beans and our 2013 ending stocks inventory from its eventual production, he says. "Old crop futures would be more influenced by Friday's Quarterly Stocks if it has more affect concerning current crop year inventory for corn and beans that ends August 31."


Hannagan adds, "We also expect a lot of old and new crop spreading between July and December corn and July vs. November beans. All this should continue to give us wild swings in the grains prior the report as traders move in and out of trades."

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