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Ron and Sue Mortensen: Planting season

04/14/2011 @ 5:59pm

Finally, it is planting season.  But for right now, there is very little going, as the forecast is wet and cold in the Corn Belt.  It’s not such a good start to a season when a decent corn crop needs to be grown.  Therefore, December corn futures have been fairly strong this week.  Old crop futures-not so much. 

There is still a corn rationing story, but a general liquidation of commodity positions began to overwhelm the market early in the week.  The effect of Goldman Sachs exiting some commodity positions (they were not long corn) is still being felt. 

For a true grain market fundamental, the influence of wheat and rain forecasts for the Kansas/Oklahoma/Texas area also takes the edge off of corn prices.  Corn and wheat can not act totally independent of each other.    

Wheat prices have been so weak that, for the first time since 1996, nearby Chicago (soft red winter) wheat futures are under corn futures.  This allows the conversation to continue and intensify wheat feeding.  It would seem that, on price alone, wheat is being fed.  However, the volume is unknown.  Also, timing could be an issue.  Perhaps wheat will not be fed in significant quantities until new crop is available?  In any case, the market will pay attention to anecdotes and will have to wait for hard data until the next stocks report, due out June 30th.    

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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