Wednesday, September 23, 2009

Corn closed $.04 higher today with December futures trading in an $.18 range. The overnight markets were weak with outside crude oil and gold lower and some forecasters moderating the potential for frost. Some of the noon weather models today put the potential for frost as far south as Northwestern Illinois and Southeast Iowa with the potential for patchy frost into central Illinois. This was enough to allow corn to rally despite the weaker influences from beans, crude oil, etc. There seems to be some other factors at work on the corn market as well with many analyst seeming to take the top end off of the yield discussions for reasons other than frost such as early results from Central Illinois showing field damage. It is too early to tell if these influences will continue because there still seems to be a lot of corn to be harvested and find a use for. Either way today and yesterday were certainly days where traders took profits on short positions in corn to evaluate crop potential.

The bean market doesn't seem to be as concerned as corn about crop prospects with bean maturity further along and early yield results promising. Beans were lower most of the day, closing down a penny or two but certainly have not had the interest from buyers that corn has had. Part of the bean price issue may be due to longer term ideas that South America will have a record bean harvest with Argentina coming out of a drought reduced 2009 crop and Brazil increasing bean acres. The bean market is setting up to have record export demand for the first half of the year before South American supplies take over the world market. This could lead to a situation where cash bean basis levels for December - February could be the best opportunities to move beans into the market. Beans delivered to our Morris elevator for December and January are currently $.135 over the January futures contract, this is probably the best these values have ever been this far in advance.

Phil Farrell