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Archived Market Commentaries:
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Date:
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1-16-09
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Headline:
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Closing Grain Comments
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Comments:
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With crude oil & stock markets showing stability despite sour economic news, grain opened solidly higher on Friday morning. Pre-opening reports of soybean export sales to China (4.262 mb) & unknown destinations (4.593 mb) & continued expectations for only light weekend rainfall & hot/dry conditions thru next week in drought-stressed Argentina sent soybeans roaring higher in early trade. Corn & wheat soon followed. Traders who were sellers after Monday's USDA reports--today's Commitments of Traders report showed a lot of big speculators did so--were scrambling by late morning to get out of some of those positions. When private analyst Informa Economics increased its 2009 US corn & decreased bean acreage forecasts by less than expected & cut 2009 South American corn & soybean production estimates, shorts had additional reason besides Argentine weather to even up positions ahead of the 3-day King Holiday weekend. March corn futures rocketed 25.75c higher, March soybeans surged 25.5c, & March CBOT wheat settled 9.5c higher on Friday. Despite the late week rebound, March corn futures lost 19.75c, March beans dropped 16.25c, & nearby CBOT wheat dropped 51.25c compared to last Friday. CBOT is closed Monday, but e-trade will resume at 6 pm Monday evening.
Markets continue to debate whether deflation or inflation is THE economic threat of 2009. This morning, the Commerce Dept reported that 2008 US consumer prices rose just .1%--the lowest since 1954--as energy prices collapsed. Falling house prices & rising unemployment--major corporations announced another 50,000 layoffs just today--have scared consumers into saving more. As even those who feel secure about their jobs stay away from auto dealer showrooms, open houses, & the mall, that lack of spending begets even more layoffs, foreclosures, & retail bankruptcies. Governments have plenty of experience about fighting inflation since World War II. That's been the main problem they faced. Deflation is another thing. The Great Depression lasted a decade before a World War, an explosion of credit, & pent-up demand finally brought it to a halt.
Corn basis improved 2c this afternoon, & bean & wheat basis was steady. Barge freight was steady to 3c weaker today as upper Midwest grain movement remained at a standstill. The combination of a surge in freight & declining futures prices were unkind to cash prices this week. January delivery corn declined 27c, spot beans dropped 25c, & nearby wheat crashed 77c this week.
Do you still have some specialty crops available for sale? Give Mike Fuhler a call at 224-7322 at the Trenton elevator as soon as possible. As you make plans for spring cropping season, check with us for upcoming pre-season price opportunities. Need financing? Give Lloyd a call at 243-5293 or contact your local Top Ag Agronomy Center at Okawville, Trenton, or Pierron.
"Closing Comments" are written by David Marshall, Toay Commodities Futures Group LLC, Nashville, IL. To learn more about his services, contact him at dmarshall@tcfg-llc.com or call (618) 327-4370 (voice/fax) or (618) 314-0918 (cell). This commentary is not intended for specific trading strategies. We strive to insure this information is reliable, but we cannot guarantee its accuracy or completeness. Commodity trading involves risks. You should fully understand those risks before trading.
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