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Rich Nelson: Wild spring price change

05/02/2011 @ 1:32pm

Corn: What a difference 24 hours can make when the funds are actively trading this market. Rumors yesterday were that European funds were selling out of long positions ahead of a 4 day weekend and today looks like different funds are buying today. It is almost as if one fund is handing their positions over to another fund.

Weather is about the same as it was yesterday. Hit and miss rains are expected this weekend, followed by a decent window for planting through midweek next week. Our next chance for wide spread rain moves in again on Thursday, followed by next weekend. Some planters are moving today with more expected to be going next week. As a whole, there are still large areas where nothing will be done which is a good reason why this market may see a small slide for now but not holding a near limit down move. As was the case last weekend, developments in the forecast will mean everything to trade prices next week. Once again, the dollar is trading lower today which should keep speculative buying interest in this market as well. Corn is accustomed to having some wild price changes in spring but it is the funds that are pushing limit moves. Trading in this market should be done in positions that allow a quick change of plans as long as the funds remain active.

Direction: When all is said and done we managed a slight gain over the last two days. One more week has gone by with less than desirable planting progress being made. Weather has held up recently with few changes, so if the planting window is still available next week then a slight slide is possible. We will keep an eye out to see if a larger window is offered by Monday or if it turns out to be another wash out. Funds will add volatility but weather will still tell us the overall direction…Ryan Ettner

Closed trades: 

(4/28) Sold December corn 651, bought 637 ∏ overnight opening, +$675 

Lean Hogs: Pork demand has been battling the cheaper priced chicken for several weeks on the domestic front and losing. However the weaker dollar is providing good global demand. We expect tighter cash supplies once fieldwork gets underway in the Midwest. Futures are struggling with funds reducing size and technical selling at the end of the month. We are expecting to see money flow to come back into commodities in early May. 

Direction: We are not adjusting our overall price outlooks yet. The issues, noted above, should eventually be narrowed down in the next couple of weeks. Also, keep in mind, in May we start the new plateau of low hog production. That lasts with us through July. For the short term, we cannot say this market is ready to bottom yet. It still appears we have a few more days to deal with these problems…Paul Georgy

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