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Soybean bull roars
The soybean bull continues to roar, running back to recent highs and finding
more support in spite of a negative report for acreage (300,000 more acres).
Yield was cut in the report, though, and that left carryout at somewhat tight
levels. The initial market reaction to the report was to drop 20c, but then the
market rallied back to positive gains in the November contract to form an upside
Even more impressive on charts is the upside reversal in corn and wheat. Corn
had a negative report, with USDA hiking yields above 159 bu/acre in spite of a
very late crop (frost susceptible). But traders made a different call, with
buying emerging after prices were down 8c on the open yesterday. The buying
continued until we were 7c higher, and closed with 5-6c gains and forming a very
convincing upside reversal. Charts already were turning higher, but the upside
reversal might be icing on the cake. While USDA shows negative fundamentals for
corn, maybe traders know something about the frost susceptibility??? A normal
frost date might do a lot of damage (more so than last year's threat), and the
trade might be too comfortable as they were bailed out of last year by a very
late frost. Even still, crops took forever to dry down last year in spite of a
mid-October frost. We may not be so lucky in 2009.
Wheat might be the biggest sleeper, with new lows on a negative report, followed
by an upside reversal and a strong close. After all, everyone knows wheat is a
bear market that can never go up. Supplies are huge, much larger than before
and everyone knows the US has a bumper HRS wheat and durum crop (and USDA more
or less told us so). Since everyone knows wheat has to keep going down, that
might be exactly when the bottom is in! Pro Ag notes Canadian wheat might be
very susceptible to frost as well as US corn, and an early frost could trim
production considerably. We note USDA cut Canadian wheat production estimates
by 1 MMT yesterday - do they know something we don't?
Overall, the grain fundamentals are negative (if you don't look at the frost
factor), but prices remain stable or higher. Perhaps there is something pushing
grains into a bull market besides frost risk? We note that outside markets
are supportive, with the dollar continuing to run to new lows, the Crude oil
strong, and the DOW indicating our worst news is behind us. Perhaps grains just
simply want to go higher on the inflation balloon, with the inflation helium
lifting all commodity balloons (a rising tide raises all ships???). We note
that world sugar prices have doubled the past 6 months, and cotton looks like an
emerging bull market as well. Perhaps there is more to the marketplace than
just the bearish numbers USDA keeps kicking our way?
Watch for more support in grains, as the market recently has whispered of an
emerging bull - not only in soybeans, but in corn and wheat as well (and maybe
even all commodities!).
In most acre updates, it looks like corn and wheat will pay for most states
(except KS, and CO in wheat). Even IA and MN look good for corn, although SD
may not pay according to some sources. Make sure you will qualify, too, on your
own farm as it might be the farm trigger which could keep some farms out of the
money. WE only have until Friday to get this done. WE are finding that ACRE
might be the cheapest frost insurance for northern producers (even SD corn
The information contained, while not guaranteed as to accuracy or
completeness, has been obtained from sources we believe to be
reliable. The opinions and recommendations contained are based on
our judgment and do not guarantee that profits will be achieved
or that losses will not be incurred. Recommendations should not
be construed as an offer to buy or sell commodities. There is
substantial risk of loss in trading futures and options on
If you have questions about this column, call Progressive Ag at 1-800-450-1404,
or email Ray at rlgAATTprogressiveag.com.
The soybean bull continues to roar, running back to recent highs and finding more support in spite of a negative report for acreage (300,000 more acres). Yield was cut in the report, though, and that left carryout at somewhat tight levels. The initial market reaction to the report was to drop 20c, but then the market rallied back to positive gains in the November contract to form an upside reversal.