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Pick a market factor-Ron and Sue Mortensen

05/06/2011 @ 6:31am

Any topic discussed recently in the corn and soybean markets (or in the entire commodity space) was decidedly bearish. 

There has been a rush out of the commodity space, coming first with a sell-off in silver, but spreading to many other items--gold, crude oil, cattle, corn, beans, wheat, etc.  It seems that many large players all had the same positions on and liquidation became almost a panic. 

Thursday’s sharp rally in the dollar also fuels lower commodity prices.  Crude oil and the dollar traded in sync Thursday--each rally in the dollar meant a move lower in crude prices or visa versa.  

This week’s rise in unemployment claims puts further fear in market participants who are worried about slowing economic growth and a faltering economy.  It all works together, so that is yet another factor that causes strength in the dollar and weakness in commodities.

The fundamentals surrounding corn, wheat and beans were not helping a lot Thursday either.  Small export sales, especially for corn and soybeans, highlighted old crop weakness.  Planting progress in some areas (particularly Nebraska, Iowa and northern Illinois) kept a lid on new crop.  Make no mistake, planting progress is still very slow, but planters are rolling. 

Friday, during market hours, a widely followed private analyst will release wheat crop numbers and supply/demand tables.  Thursday afternoon, after trading, the Wheat Quality Council tour that has been going on the past few days put the Kansas crop at 257 million bushels, below an average guess of 278 million bushels. 

The USDA will take a turn at these wheat numbers next Wednesday.  They will also release 2011-2012 supply demand tables for the first time since the Crop Outlook conference in February. 

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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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