February 20, 2009

The weeks need to stop ending like this! Despite another good week of export sales and shipments, corn and beans were lower today. The bean market has a feeling that the stellar export sales to date will suddenly fall of a cliff — and even if we keep selling, then it doesn't matter, because they will be replaced. So far, soybean export shipments are up 18% over last year and sales are up 6%, all while USDA is still forecasting a 5% drop in year over year exports. There really seems to be concern that even if soybean exports continue strong that we are somehow encouraging too many acres to be planted.

The corn market seems to be suffering from an overall lack of interest. Exports sales and shipments were strong this week but year to date sales are still 44% below last year's total, with USDA forecasting a 28% drop for the year. We need the catch up activity to continue.

Speaking of uncertainty, many comments and discussions we have had in the past couple of months seem to focus on acres. I have heard several times that we should see commodities rally when we have to fight for acres. Unfortunately that hasn't occurred to date, but who knows what could happen. Seems like recently the bean market in particular is trying to go to a price that discourages acres. The recent rains in South America have stabilized their crop and attitudes from the western Corn belt seem to indicate a willingness to plant beans over corn. Our answer to that question has been that local farmers will again favor corn. Is that true?


Thank you to the first commenter on our Blog. This week someone asked what our 30 day outlook was for old crop prices. This is hard to answer as we sit at thirty day lows, but we believe that producer movement at some point will pressure the cash grain basis. Will it also pressure futures prices more? It seems as though there are many outside factors hitting corn and soybean markets right now that are too hard to pin down.

Have a good weekend, Phil Farrell