February 18, 2009

Grains broke out to the downside this week followed by aggressive selling. With March Corn taking out 3.50 support and March Soybeans penetrating 9.60. Today grains continued that path with March Soybeans closing down 15 1/2 cents and March Corn the only exception closing somewhat victoriously at unchanged. The grain market is tired of talking about South American weather and is attempting to move its focus on to demand and the up and coming North American growing season. There appears to be a general consensus that acres will meet demand. An item of note is 5yr average price on corn basis front futures is 3.27, while soybean basis front end futures 5yr average at 8.16. Although oversold conditions are starting to surface. It appears that corn futures would like to test the 3.30 area and soybeans the 8.30 area basis front end futures. Hopefully that will be enough to stimulate demand. Export sales data needs high attention at this point in time, for that is where it will be easiest to source any demand changes. The US Dollar Index rallying of late trying to tell us that cash is king and those holding it will likely be rewarded. Although, this raising the export prices of U.S. grains on the world market. Little activity in the outside market arena with the Dow teetering at 7500 support and oil continuing on its slide to apparently the mid to upper $20 area.
Again, if you have any ability to execute basis levels, nearby bids are very attractive.

Jeff Neisler