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Now that USDA's spoken, concerns turn back to weather

Agriculture.com Staff 06/30/2009 @ 1:18pm

It's like a broken record. For months, everybody's said the weather will be the main factor in the direction of the grain trade.

On Tuesday, after the dust from the morning's big USDA Acreage and Grain Stocks reports had settled, the broken record skipped again.

"I think as we enter the critical growing season, weather is front and center," said Brian Basting of Advance Trading on Tuesday after USDA's numbers were released. "I think in all, we are finding acres we were missing in March, and it brings us into the weather market leading into July 4 weekend."

But, the weather concerns are sharpened by supply and demand numbers for both old and new crop corn and soybeans. Both are subject to shaky buyers and end-users: Soybeans will already be in tight supply, most market-watchers say, underscoring the need for a good bean crop. And now that some are seeing the seeds of recovery in the ethanol industry and a tipping point for survival for livestock producers coming later this year, there's a lot of upside potential for corn demand later this year.

"These livestock folks have been under severe stress in terms of profitability. Perhaps this report, if we can get into the next 60 days, might be able to let them hold on," Basting says.

"Demand is really a very dominant feature in the profile of corn in terms of the demand side of the livestock herd," adds AgResource analyst Greg Wagner.


Brian Basting of Advance Trading in Chicago talks about some of the critical factors ahead for the corn and soybean markets after Tuesday's release of the USDA Acreage and Grain Stocks reports (video by Mike McGinnis).

Tuesday's USDA numbers are certainly bearish overall, and that's got farmers wondering about the new low just weeks after the new high was the talk of the town. Even with acreage and stocks numbers that would be considered bullish alone for the soybean trade, that crop will likely follow corn's lead lower.

"After the bloodbath in corn, maybe it will be a buy since we have the whole growing season left to go," says Agriculture Online Marketing Talk member John From S. MN. "Beans will try and tread water and will probably have a hard time doing it all on their own."

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