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GDP drops farm markets

07/29/2011 @ 10:13am

CHICAGO, Illinois (Agriculture.com)--To end the week, the CME Group grain and soybean markets crashed Friday. Mainly, outside market pressure coming from U.S. debt default uncertainty and a weaker Gross Domestic Product revision are keeping the farm markets down, traders say.

The Dec. corn futures settled 17 1/2 cents lower at $6.68 3/4. The Nov. soybean contract closed 14 1/4 cents lower at $13.57 1/2. The Sep. wheat futures contract ended 20 3/4 cents lower at $6.73. The Dec. soybean meal futures contract closed $4.80 lower per short ton at $358.80. The Dec. soyoil futures settled $0.12 lower at $56.43.

In the outside markets, the NYMEX crude oil is $1.53 per barrel lower, the dollar is lower and the Dow Jones Industrials are down 58 points.

Sid Love, Kropf & Love Consulting Services LLC., says a poor GDP report may be a contributing factor to these weaker commodities, on general ideas that U.S. economic growth is slowing. "We came within a hair's breath of having a negative GDP for this quarter. You might as well consider it a signal of a double-dip recessionary move," Love says.

On Friday, the April-June GDP came in at a 1.3% increase, below economists expectations. That's slower than 1.9% during Jan-March. 

Since the farm markets are operating in a global market, factors such as a weak GDP and a threatened U.S. debt default have all of the global-based speculators running for cover, Love says.

"Keep in mind that the speculators play a big part of running up farm markets and running them down.

In addition, the market is trying to figure out these two different Corn Belts. "The northern half of the Corn Belt has a pretty good looking corn crop. However, the southern half is fried," Love says. A drought in Oklahoma, Texas and moving into Missouri could cut the U.S. crop."

On Friday, the market is going with the idea that the northern half of the Corn Belt will trump the southern half's production. 

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Really 07/30/2011 @ 5:52am So it makes no difference that china is gonna import more corn and crop ratings continue too fall let's just keep knocking prices down every week the cbot contradicts it self our crop is not their it will not be their at harvest time the acres that USDA said we have is a flat out lie along with their crop ratings in reality the corn is maybe 50% good and beans 40% but they gotta lie about that too keep the prices from spiking upward.

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