January 23, 2009

Corn and bean futures closed mixed today ahead of another weather weekend in South America. For the week corn was virtually unchanged with soybeans losing $.11 despite what many report as significant drought conditions in parts of Argentina. The combination of a strong US dollar, weaker crude prices and US and world equity market weakness has largely offset dry forecasts, leading to the stalemate experienced this week.

The weekly export sales report provided friendly input for corn today at 42.7 million bushels. This was better than expected and easily surpassed the four week average of 10 million bushels. Corn sales year to date of 890 million bushels are about half of last years levels and we still have challenges to meet the USDA 1.75 billion forecast. We are really seeing the effects of increased foreign corn and wheat production. Maybe this week is the start of demand coming back to U.S. corn as competing feed source alternatives start to dwindle? The increased export demand has helped support local basis levels for March delivery at the river at are starting to get somewhat respectable. The weekly soybean sales report was also strong at 48.7 million bushels putting us at 79% of the current USDA forecast for the year.

Next week the prevalant market issue looks to be the drought situation in Argentina, in particular as continued drought there will certainly lead to reduced corn and soybean crop estimates.

Have a good weekend,

Phil Farrell

January 22, 2009

Grain markets were down for the day with the soybeans seeing the most bearishness from larger rain events forecast for Argentina. The other influences was a larger than expected jobless claims, smaller then expected housing starts, and the larger unleaded gas stocks. Today's price decline was more of a function of a market that wants to break out of a sideways type trend with nobody taking control, neither the bears or the bulls. The market is searching for news and it cannot find the trump card that will drive this market either way. This news will eventually come whether it is weather related or economically related. The market has digested just enough of the economically bad news that it can take. It is this writers opinion and opinion only that there will be some news shortly that will take us out of this back and forth market whether it is direct fundamental or outside influences.

Chuck Peterson

January 21, 2009

Ag Futures this afternoon closed modestly higher following a list of bullish influences led mainly by old crop soybeans. Today Argentina cut its production area for soybeans to 16.5 million hectares down from 17.8 million hectares. The forecast for corn was also trimmed from to 3.4 million hectares down from 3.5 million hectares. This all following strong export inspections this morning for soybeans. Although the grains remained within Tuesday's wide trading ranges Until the rain is in the gauge in South America the downside on especially soybeans appears to be limited. Strong support basis front end soybean futures lies at 9.60 with resistance lying at 10.60. Corn appears to be following along for the ride, but fundamentally speaking has trouble developing a bullish argument from the demand side of the equation. Support basis front end corn futures lies at 3.50 and resistance at 4.00. In outside markets, Dow Jones closed back above 8000 points at 8228. Crude oil trading at 43.95 basis March Futures above yesterday's highs at 43.79. The Dollar Index near lows at of the day at 86.05 down 80 points. With this being said, grain markets appear poised for a gap higher opening tomorrow unless weather forecasts improve rain events for South America overnight.

Jeff Neisler

January 20, 2009

After today's Presidential Inauguration, the dollar made a significantly stronger move higher and that hurt commodity prices throughout the day. Weather in South America continues to be dry with limited rain in Argentina over the long weekend. Brazil weather has not been as harsh but also not ideal. Crop prospects in South America will continue to decline with the current 7-10 day forecast which only shows scattered showers. Today's negative price action is being attributed to fund selling (profit taking from Friday's trade) and a stronger dollar. Locally, last week's weather is taking a toll on the Illinois River with ice issues creating problems for barge traffic. Tonight's price ratio of 2.21 (Dec 09 corn at $4.30 and Nov 09 soybeans at $9.53) still favors a switch to more soybeans but time will tell what actually happens this spring.

Scott Meyer