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Ron and Sue Mortensen: First things first
Of primary importance to the corn market is the reaction by world feedgrain users to the drought situation in Russia and neighboring countries. There has been an immediate evaporation of the Black Sea ports as a source of feed supplies in the world. End users of the world must significantly rearrange their suppliers and their type of feed grain in many cases.
The US has, therefore, moved up several notches on end users’ supplier lists. This in turn has caused estimates of corn exports to increase. Buyers are not waiting. This morning, the USDA reported weekly sales of over 1.6 million metric tons of new crop corn. While not as large as the previous week, this volume makes both buyers and sellers sit up and take notice. By the way, wheat and soybean sales were also good sized.
With the world more reliant on US supplies, concern increases about the size of the overall US corn crop. It turns out hot, dry weather produces anxiety in the US, just like it does in the FSU! Perhaps anxiety is too strong a word, as the worry in the US comes down to subtle one or two bushel shifts in yield.
Traders are also watching western Australia, a major producer of wheat for the Asian export market, and western Argentina (also a wheat exporter) to see if rains can relieve dry conditions. Rain is in the forecast, especially for Australia, but it is early in the southern hemisphere growing season, so more will be needed. Of critical importance is also the rain situation in the FSU. There has been some light rain, chipping away slowly at the dry area. Here, too, more rain is needed. The world needs some assurance that this wheat shortage will not be a multi-year phenomenon.
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.