Good morning,
The markets are steady this morning with corn down 1 and soybeans down 3.
Something a little unexpected happened after the lower open yesterday. New investor flows of money moved into the ag markets. Corn open interest was up 19,026 contracts and beans were up 5,178. Goldman is said to be pushing some investment money into the commodity index products.
Some pop-up showers developed overnight in Argentina. Totals of .1-.7 inches fell with more on the way tomorrow. Three storm systems are projected to move through in the next two weeks. Take a look at the 10 day forecast below, it shows up to 4-5 inches falling in some areas over the next week with total coverage at basically 100%. The heat also moves out and normal temps are forecast next week.
Brazil’s Ag Minister yesterday said crop production could be increased by 5% per year for “several years” without deforestation, due to the conversion of pastureland; the country has over 370 million acres of pastures with low productivity, and nearly 100 mln ac of that could be converted into crops.
There are comps in the past that can be used to apply to current market conditions and the one that comes to mind is 2013 corn. Corn doesn’t normally make the high in January, more normal would-be June. So why sell. I think this is part of a potential unwind that we have going right now. 2013 was a serious unwind with each rally lower than the last. The highs in 2013 were made at the peak of the 2012 drought, with the last decent rally during September. This is obviously weather dependent as hot dry weather could change the course. If crop conditions improve in SA and US weather is normal for once, prices will go down.
Producers should be selling more crop that they normally would and doing it now. Current values for old and new crop corn are profitable and should be taken advantage of. Let someone else pray for higher prices later.
Have a Safe Day!
Garry Gard
920-348-6844
