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Published January 26, 2008, 12:00 AM

Bullish news continues in commodity markets

The bullish news continues to flow in to the commodity markets. The latest blast of bullish inputs came from the January series of USDA reports. These reports showed bigger corn consumption than expected and reduced corn ending supplies by 359 million bushels. The USDA winter wheat plantings estimate also showed that hard red winter wheat acres were much smaller than expected.

By: Mike Krueger, The Jamestown Sun

The bullish news continues to flow in to the commodity markets. The latest blast of bullish inputs came from the January series of USDA reports. These reports showed bigger corn consumption than expected and reduced corn ending supplies by 359 million bushels. The USDA winter wheat plantings estimate also showed that hard red winter wheat acres were much smaller than expected.

It was too dry across the major hard red winter wheat producing states last fall and producers simply decided not to plant into very poor moisture conditions. The impact of these reports was that corn, soybean and wheat futures traded up their respective daily limits for two trading sessions.

Soybean, soybean oil and wheat futures have now set new all-time highs. Corn futures have not eclipsed the all-time high of $5.50 set in 1996. Not only are prices for the major crops at or near all-time highs, prices for nearly every other crop also continue to rise. The unexpectedly sharp decline in this marketing year’s corn ending supplies has changed the makeup of the 2008 acreage contest in a major way.

Prior to the January USDA report corn ending supplies were pegged at almost 1.8 billion bushels. That is a comfortable number and sent a message that corn could afford to give up acres to soybeans in 2008. This report cut those ending supplies to just over 1.4 billion bushels. The 359 million bushel cut in supplies divided by an average yield of 150 bushels an acre is the equivalent of losing 2.3 million acres of corn three months before the snow even melts. Soybean acres need to gain a minimum of eight to 10 million acres in 2008 to prevent ending supplies from dropping to dangerously low levels.

Krueger is the host of “The Money Farm,”

a syndicated radio and television program

on grain marketing and is a licensed

commodity broker. He can be reached

by e-mail at mike@themoneyfarm.com.

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