The holiday markets are coming to an end.
Yeah!
March soybeans tested the Nov. 3 highs and fell back.
Meanwhile, after a week of a key reversal potential, March corn closed steady for the week. I suspect that these two markets are seeing some unwinding of long soybeans and short corn spreads. That could be a symptom of a market not too far away from a high. However, traders continue to watch South American weather and as the week came to an end, there is a slight pick up in the rain forecast.
During the first nine months of 2008, Argentine soybean sales tended to increase 22 percent from the same period in 2007. This tends to argue that the Argentine farmer is holding a lot of old crop soybeans. It is questionable as to how much storage there actually is in the La Pampa region. Argentine farmers are dealing with exorbitant high costs for fertilizer and pesticides. Likewise, Brazilian farmers cut back as much as 8 percent on fertilizer applications.
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It is now similar to our July in Brazil and we suspect that the yields are going to decline 5 percent to 10 percent.
In the U.S., I suspect that it takes well into February to fight for acres between corn and soybeans.
Furthermore, wheat is so cheap and favorably priced that it can substitute for corn as feed. There is an abundance of feed wheat flooding the world markets. In Russia, wheat is down to $3 a bushel. There have been reports that China may issue export licenses for up to 5 million metric tons.
Yet this past week, even those rumors were rescinded. If China doesn't enter the export market, the U.S. will be in a good spot to maintain healthy sales to Taiwan and South Korea.
And when it comes to ethanol, it may be some time before the ethanol plants have worked through the high priced corn that was purchased. Once they do , they will be back to production resuming to more consistent pace. The market is offering up some opportunity for getting cash sales on the books.
Sue Martin of Ag & Investment Services Inc. in Webster City, Iowa, can be reached at (800) 527-0051, email ag_invest@netins.net . This publication is strictly the opinion of its writer and is intended solely for informative purposes and is not to be construed, under any circumstances, as an offer to sell or a solicitation to buy or trade in and commodities or securities herein named. Futures and optioning involves substantial risk of loss and may not be suitable for everyone.
