The power of a picture
By the end of the day Tuesday, the corn market was limit up. Why? A big reason was various pictures of pollinated corn cobs! In the Internet age, pictures of crops can be sent to someone’s entire contact list in a matter of seconds. It takes no time at all for the market effects to snowball.
No matter what the corn looked like—the market’s attention became focused on the yield potential of the crop. Adding to this yield focus were several private crop estimates. The two most widely watched pegged the corn crop at 13.002 billion bushels and 13.353 billion bushels. For the soybean crop, the numbers were (in billion bushels) 3.145 and 3.139.
There were other estimates as well, including some under 13 billion bushels of corn. Some simply used the USDA figures for harvested acres. Others made attempts to lower acres, to reflect flooding and drought abandonment. Remember the USDA is re-surveying a few states for the August report. However, it may be until the October report before the market has an accurate handle on acres.
Today, the market’s focus was back on the continual bearish stream of macro-economic news—the issues in Europe, worries about a double dip recession, the strong dollar, weak crude oil prices (down over $5), a focus on safety in a world of uncertainty. Cash and US Treasuries (still perceived as the safest thing around) are king.
Market participants now have a week without too much new data to look at their numbers and weather forecasts. More moderate temperatures seem to be the forecast, but there are big question marks regarding rainfall.