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Corn falls, soy prices stay up

03/02/2011 @ 9:44am

CHICAGO, Illinois (Agriculture.com)--The CME Group soybean prices finished sharply higher, corn was unable to climb out of negative territory Wednesday. 

The May corn futures settled 14 cents lower at $7.21 1/2. The May soybean contract closed 19 cents higher at $13.94 1/4.  The May wheat futures closed 1 cent higher at $8.11 1/4. The May soymeal futures settled $1.00 higher per short ton at $364.40. The May soyoil futures settled $1.20 higher at $58.80.

In the outside markets, the NYMEX crude oil is $2.57 per barrel higher, the dollar is lower, and the Dow Jones Industrials are up 19 points.

Don Roose, U.S. Commodities president, says inner-commodity spread-trading sent the grain markets in mixed directions. "For awhile now it's been popular, from the spread standpoint, fundamentally, to be buying corn and selling wheat and buying corn, selling soybeans." However, the fundamentals have turned enough that concerns have set in that wheat prices are getting too low compared to corn, he says. "If that happens, wheat will be used for feed vs. corn. So, that idea kept a lid on wheat prices today," Roose says.
For soybeans, the support came from concern over Brazilian harvest delays. "Also, the trade is thinking the market has bought the 2001 corn acres, not the needed soybean acres. We have to make sure we get more soybean acres from double-cropping."
Going Forward

"Choppy markets most likely going forward, this week. We had a key reversal in the March and July corn contracts. So, technicians will take note of that event in the overnight markets," Roose says.

Light Deliveries
Roose adds, "We're moving into a timeframe where stocks are going to get tighter with each passing week. As we approach August 31, the end of the marketing year, we know where our ending stocks are: 18-day supply of corn and 9-day supply of soybeans. Overtime, cash is going to be king. Each delivery period we will see fewer and fewer deliveries. Cash supplies are more valuable than deliveries.
O
ne floor trader says, "The uncertainty around the world is causing people to rush to safety in gold and silver. Other people are deciding to run to the sidelines of the grain markets. Corn and soybeans have individual stories today. Volatility is certainly returning to these markets, this year.

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