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The Report fear factor

03/29/2012 @ 3:19pm

It’s impossible to know what the USDA is going to say in tomorrow’s reports.  But fear overtook the commodity pits this week, resulting in massive selling of corn, wheat and even beans.  

Just for reference, the last three quarterly USDA reports (every quarter has stocks data, plus some quarters have acreage data) have produced limit down days in the corn market.  So, when there was really no new news in the market on Monday morning, the selling began.  The Chinese buying of small amounts of corn this week could not even change the tide of “get me out” selling.  No one wanted to stay long with the risk of a limit down day coming on Friday.     

So far this week, May corn is down 42 cents (the daily limit is 40 cents!).  May beans are only down 10 cents.  So the theme of buying soybeans and selling corn (or wheat) continued.  The bean/corn ratio in the new crop is almost 2.50, as the bean market tries to entice farmers to plant a few more bean acres.  

There will be so many numbers out tomorrow that there will be a surprise somewhere.  Will it be in the corn (as in the past) or will it come from some other crop?

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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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