Corn's hurt, not soy, says Argentine farmer
“What’s driving this market?” That question is often asked when fundamental or technical factors don’t show themselves clearly. And sometimes, when it’s felt that the market force is clearly defined, it’s surprising to find out something very different is the culprit.
We may be in a period of the market that what many believe to be the driver is really in the ‘passenger’ seat of this market mobile.
For instance, for weeks now, the dry weather pattern for Argentina’s crops has fed the marketwatcher’s opinion as to why this grain market is rising.
This week, July 2011 soybean futures hit the $14.00 per bushel mark. Largely, the trade relied on that Argentine hot/dry weather pattern as the underpinning factor.
Yes, the Argentine weather is hot and dry. And yes, rain is needed to provide relief to growing corn and soybean crops, according to U.S. weather forecasts and U.S. grain analysts reports.
However, information closer to the situation, indicates the market may have it all wrong.
Santiago, an Argentine farmer, posted conflicting details in Agriculture.com’s Marketing Talk this week.
“Being an Argentine farmer and suffering the weather here, I can say that the market is making a mistake today. The weather will hit the corn, that’s for sure. But, the soybeans won’t be hurt as much, at this point. Nearly 50% of the corn is now in the middle growth stages, ending their critical period. And, I can say 0% of the soybeans are on their critical period today. So, I was expecting to see more increase in corn than in beans, at least from the weather point of view,” Santiago says.
Santiago says the market should be more focused on the yield suffering that is going on in the corn crop, not the condition of the soybeans.
“If the market is thinking that this dry pattern can continue, well that’s another reason for higher markets for soybeans. But, the reality is that corn is suffering a lot, the damage is really done,” Santiago says.
As many traders and analysts say, the market trades fear, not fact. So, the higher market may be factoring in fear of a continued drier Argentina.
In fact, as of Wednesday, wxrisk.com released a hot/dry Argentine weather outlook.