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Nasty fall for corn, soybean markets

11/18/2011 @ 8:09am

Every so often, there is a nasty day in the markets.  Thursday was one of those days.  The morning started out with a bad case of jitters regarding European debt and any spillover that may hurt American banks.  This weak economic picture led to widespread commodity selling, affecting gold, silver, crude and ag commodities. 

There were also bearish news tidbits in the market regarding corn, but most of them were topics that had been discussed previously.  This morning’s corn export sales were poor, which is not surprising since Ukraine and other countries have been selling lower priced corn.  Then there is feed wheat, still being exported also from a variety of countries and also cheaper than corn.  There are also stories regarding feed wheat perhaps being sold into the Southeast. 

US corn, in some respects, has become an island unto itself.  In order to make it to September 1, 2012, corn use must be reduced.  With ethanol use very strong, it appears feed use and exports must be reduced.  Has this been accomplished?  For the corn market, the problem is the stocks report is not until January 12th.  This is a long time to wait for information.  Impatient traders who are long corn may liquidate on days like this and see what the future brings.     

For soybeans, improved weekly export sales and a daily sales announcement of 420,000 metric tons of beans sold to China meant prices only went down 20 cents.  Export sales are still well behind last year’s numbers, but right now there could be a more positive attitude due to questions about whether the Chinese will buy more to increase government reserves. 

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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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