Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Commodity Markets Poised for Price Recovery
December new crop corn futures are now bidding at levels not seen since March 2008. On March 20th Dec corn futures closed at $5.21 per bushel and didn’t look back until achieving a close of $7.88 per bushel on June 26th. November soybeans are trading at levels last seen in early May, when we saw a $4.31 per bushel run in soybean prices that peaked in early July (prices ran from $12.00 to $16.31 per bushel). Many market observers have correctly indicated that the sell off in the commodities markets can be attributed to fund liquidation, the price of oil dropping, and great weather conditions for crop development. What was not readily known until yesterday was that some of the fund liquidation was forced by the CFTC, likely due to the inability of an undisclosed firm to meet margin calls. That said, it now looks like we are likely to enter into a counter seasonal rally, if not before harvest then at the completion of harvest. Why? The U.S. corn crop, which is doing phenomenally well considering the events that have occurred this summer, can still be stunted by an early frost. An early frost would reduce the projected U.S. corn carryover to less than 1 billion bushels and would mean that U.S. corn acres would need to increase in the ’09 crop year. With U.S. soybeans looking at a 125 million bushel carryover projection, soybean prices will also need to bid for ’09 acres. Therein lies the stage being set for a counter seasonal rally. Go to: http://www.allendale-inc.com/ and click on “Can This Late Crop Beat a Freeze?”
Marketing Strategy
Price charts for new crop corn and soybeans currently indicate that it is time to offset puts, buy calls, and to generally plan to store unpriced ’08 corn and soybeans. On Tuesday, August 12th USDA will release the August Supply and Demand report. On Thursday, August 14th a one-hour webinar will be held to discuss the implications of the report, and to explore options and other marketing strategies. To register for the Options and Other Strategies for ’08/’09 webinar see the information in the announcements section.