- Today has restored a degree of faith in what we believed to be market fundamentals in true “turnaround Tuesday” style, particularly as far as corn and wheat are concerned. Dec ’13 corn broke below the lows of yesterday before the USDA report sent prices upwards as did Dec ’13 wheat. The soy complex was somewhat more reserved trading in a more conservative manner with soybeans closing either side of unchanged but certainly not following yesterday’s upside momentum. The big question will be, “have we seen the end of a short lived price rally?” It is clearly far too soon to answer this, but today has shown that there are those who appear to disagree with the USDA report, and in some style!
- Those who believe we will (very soon) be seeing a large US corn crop, in addition to large Brazilian and Ukraine crops, and the need for the US to become competitive in an already competitive market have had their way today, and would appear to have dragged wheat along for the ride. Reports have indicated that funds were buyers in the soy complex and have sold corn and wheat today.
- If we look at historic price relationships (which we know is no guarantee of future direction) the relative price of soybeans to grains is high, and in the course of normal events is likely to correct to more “normal” levels I.e. lower.
- US crop condition as reported yesterday shows corn crops 64% good/excellent, which is unchanged from last week, as is the soybean crop at 64%. Spring wheat good/excellent rating is down 2% from last week at 66%, and the winter wheat crop is reported to be 92% harvested, 1% better than the five year average.