Good Morning,


Turnaround Tuesday and Wednesday? Corn is down 12 and soybeans are down 26 to start the day as the markets follow thru on yesterdays selloff.


Markets are correcting sharply after a dud of a USDA crop report yesterday.  The funds are holding record long positions in corn, meaning a correction is unfolding of greater magnitude.  The Funds held somewhere between 320-340 thousand contracts at the high on Jan 13th before the position was liquidated on a dollar fifty break and eventual low with a fund position close to 80,000 long.  The current bean position is probably a little North of 200,000 this morning.  The USDA didn’t alter much on the crop report, which just about anyone could have guessed.  They are taking the approach that the market will figure it out on its own and have little interest in lowering carryout much further.  Crop insurance is set in February, so it may not be in their best interest to chop 300 million bushels out of the corn carryout.

This market could still head higher in the coming weeks and months, but fundamentally this corn market is too high given the stocks that we have on hand and historical price charts. After yesterday’s adjustments we are still north of a 10% stocks to use ratio which would imply that this market is close to a dollar too high. This recent setback needs to be a reminder to anyone holding grain that the markets will not continue to run higher and the floor could fall out at anytime. (Remember what happened 12 months ago!)


Have a Safe Day!


Garry Gard