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Grain Markets Face Split Personalities

05/29/2014 @ 2:54pm

Last week finished off with a upward motion in prices, especially for soybeans, as the market worried about both supply and demand issues.  With a three-day weekend, there is also a tendency to reduce or totally liquidate positions.  Tuesday’s market action, after the long holiday weekend, was a sharp downward motion, due to better than expected actual weather and the week’s weather forecast. 

The split in market personality between soybeans and wheat/corn continues this week also.  The weakness in wheat prices around the world drags US wheat prices down, despite any bullish attitudes traders may have about US wheat production potential. 

For corn, the early growing season looks good and concerns about planted acreage have receded into the big of traders’ minds.  This issue will re-surface, but not until closer to the June 30th acreage report.  Adding to the bearish flavor, Tuesday night’s planting report, which showed 88 percent of corn and 59 percent of soybeans planted, was very close to the five year average and within the range of market expectations. 

The soybean market still has the ability to rally even when the other main ag markets cannot.  This week has not produced answers to the question of how the market manages to have some minimum level of carryout by September 1st.  As far as the elephant in the room, China, this week has been relatively quiet.  China did buy some new crop beans, but there was no news on the remainder of the old crop sales. 

The weekly schedule of market data is a little off, due to the Memorial Day holiday.  Export sales will be released tomorrow morning.  The market will be looking closely at old crop soybean sales—any sales right now are perceived as too many.  The weekly ethanol grind was this morning and showed another strong production number. 

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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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