For much of the past few weeks, the market has been focusing on the amount of planted corn and soybean acres. But, with rain continuing to delay fieldwork, Doug Werling, with Bower Trading, says weather is becoming a market factor, “As we begin the week, if we continue to see a lot of moisture ahead of us in the forecast, you may see the market begin to acquire some long positions instead of just selling the short side.”
Werling says demand, while not making headlines, is strong and is providing a solid base for the market to build on, “That is why you are seeing soybeans hang around that $9.50 level instead of $8.00 and corn trading at $3.70.” He added that China has been a good buyer of the increased South American production this year and that, in the future, the Asian market, with its growing middle class, will continue to be a strong market for grain from the world market.
Several record-setting years of production here in the U.S. have built up a surplus that has kept the market lower, but Werling says it would not take much to turn the supply and demand situation around. He said, even with a lot of grain still in farmers’ bins, just one average production year in the U.S. would see a big drop in the surplus, “It would only take one year of lower production to chew up that surplus, and all of that grain in the bin would move into the market very aggressively as prices moved higher.”
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