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Markets settle into post-harvest mode

The markets seem to have transitioned into a post-harvest mode, with continuing improving basis levels (for both corn and beans) and more thoughts of improving corn export sales.  Soybean sales are already huge.  

The struggle for both markets is the timing and smoothness of the transition between the small US crop and the (potentially) larger South American crops.  For example, how does the US crush and export a record proportion of the bean crop before March 1st?  What price is necessary to pry that many bushels out of farmers’ hands?  And what price is necessary to keep enough beans in the US for the second half of the year?  Or maybe the US imports beans from South America in the summer?  

For corn, the lower priced Ukrainian and Brazilian supplies seem to be dwindling as winter approaches.  So there is going to be a period when the US can supply the world market until Brazil and Argentina harvest 2013 corn.  Meanwhile, corn prices will be sensitive to clues regarding domestic production -- weekly ethanol production, livestock/poultry/egg data.       

Unusual Friday

Due to Hurricane Sandy and the luck of the calendar, there will be a lot of reports out in the next 24 hours to influence prices.  For corn and soybeans, there will be two private estimates of crop size -- one late Thursday afternoon and one during trading on Friday morning. The USDA weekly export sales report will also be released early Friday morning.  Finally, for some big picture economic flavor, the monthly jobs report will be released, providing updated unemployment numbers.  

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