Ron and Sue Mortensen: The carryout is the carryout
OK, OK, we’re stuck with it. The USDA released an ending stocks number for corn Thursday that was shockingly large—1.708 billion bushels. It will stare us in the face every time we look at historical supply/demand data.
The pre-report estimates had no number in them that was anywhere that big. While many expressed the opinion that the number could be large, no one thought it would be 1.7 billion bushels. If anyone imagined that, they kept it to themselves.
There are two problems that need to be considered with this number. Although the USDA denies it is the case, some believe early harvested new crop got mixed in with the old crop. Or, the newly harvested crop was used instead of the poor quality old crop corn.
The second “problem” really surfaced with the USDA’s June corn stocks number, which was surprisingly low. Released at the end of June, it was one of the main catalysts for the summer rally. Did the USDA “find” some corn that it “lost” in June?
The resolution? The stocks report as of December 1st, which will be issued in January of 2011. That’s a long time to wait. Never the less, come to terms with the uncertainty and realize that the market always has uncertainty. No one ever said trading corn and soybeans was simple and painless.
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.