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Same Market Story, Different Market Week

07/24/2014 @ 2:41pm

Many of the same fundamental forces continue to play out in the markets this week. More estimates of a record corn crop hit the news wire, weather forecasts do not contain a massive heat dome, and speculative liquidation/selling continues. 

This week, demand surfaced for beans, with export sales announcements most every morning. In the weekly sales report, new-crop sales were 2.45 million metric tons. This sales volume, combined with a drier (but not hot) forecast, has caused a price bump in the past two days. For the first four days of the week, November beans are basically steady.

Is this the end of the price drop?

Summer is the season of supply, thinking about the two factors in the supply/demand equation.  So weather, acreage, and yield become the most important items in determining price. If forecasts and estimates of crop size continue to grow, then prices will drift lower. 

Demand is certainly a factor in determining price, but it should become more important in the fall and early winter. For right now, the market respects the huge new-crop sales that are on the books, but the crop size is perceived to be large enough to meet the needs of the exporter. Remember carryout could be 450 million bushels or more in the U.S., plus the Argentine and Brazilian farmer still own a large portion of their crop. 

It’s two-and-a-half weeks till the August crop report!

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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