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The big picture

Sometimes large daily moves in the market make it hard to see the big picture.  The occasional updraft or speculative wash-out causes market participants to focus on the story of the day. 

After the distraction, traders realize the overall theme of the market is still in place.  Ever since harvest finished, the big issue has been the transition between a very tight old-crop situation and an adequately supplied new-crop balance sheet.  The January USDA reports increased the anxiety about this.  It remains to be seen whether the March 8th supply/demand update or the acreage and stocks reports on March 28th will do anything to alter the conversation.     

Today there are several factors leading the market to realize this “big picture” problem has not been solved: 

1. Strong old crop sales were reported for beans and meal in this week’s export sales.

2. No deliveries occurred against the March corn, bean and meal contracts. 

3. Someone (a large commercial firm?) bought wheat receipts, which would suggest wheat is going to be loaded out and used/exported. 

4. Two Argentine bean crop estimates were below 50 mmt (actually 48 and 48.5 mmt).

5. Ethanol production is creeping higher. 

6. The cash markets continue very strong, suggesting end users are having difficulty attracting physical supply.    

7. The bull spreads in corn and beans continue very strong as well. 

The CME should announce new trading hours soon, perhaps as early as tomorrow (Friday, March 1st).  There has been a movement for less hours and the CME did a survey of market participants to get input.  Fewer hours would be appreciated by many, but could lead to some short term changes in volumes or participation until everyone is comfortable with the new situation. 


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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