Tuesday February 2nd, 2010

Well not a lot of news out of the fundamental side of the grain markets today but with the US dollar weaker and crude oil up an impressive $2.59 a barrel, all grains managed significant gains today. Corn closed up 6 cents, soybeans up 15.5, and wheat ended up 11.5. There is a lot of talk about how this year's low quality corn crop is not going to allow for carryout to stay at 1.7 billion bu. I have below made some bullets from an Ag Economist on why the low quality corn could mean the opposite of what people are thinking:

1. More corn being fed due to low quality will more than be offset this year due to record DDG feeding.
2. Estimated additional 200 mbu of corn fed due to low quality but carryout is still burdensome at 1.7 billion even 1.5 billion is too much carryout for volatile prices.
3. On export front, low quality corn will push buyers to Argentina and it will be hard to push over 2.o billion bu through export channels.
4. The market has known about poor quality now since December and corn prices have lost 70 cents from early January highs.

The above bullets are nothing more than food for thought. There will be no real grain reports of significant interest until Mar 31st. That is when the USDA will publish 2009 production results from re-surveying and publish 2010 planting intentions for corn and beans.

Scott Meyer