Monday June 17th, 2013: A Look at Corn Futures

Monday June 17th, 2013: A Look at Corn Futures

A Look at the Market Since Our Last Update: The overall market with few exceptions finished last week lower, down approximately 1% across the board. Interest rates moved slightly lower in what appeared to be a round of late week Fed intervention to halt the advance of interest rates towards higher levels. In the commodities markets, Oil finished the week at $98.07 up $1.15 on the day, and Gold finished the week at $1,387.60 up $9.8 for Friday. In the grain markets, Wheat finished the week at $6.806, down $0.046 for Friday, and Corn finished the week at $6.550 up $0.114 on Friday, while Soybeans finished the week at $15.164, up $0.062 on the day.

A Few Thoughts on the Upcoming Market: I think the increase in interest rates was only halted last week due to late week intervention in the bond market by the Fed. Frequent readers of my postings will know that I feel the bond market, and subsequently the stock market, are subject to the manipulative effects of the Fed. I will save further commentary on the bond market for another day. Frequent readers of my postings will know that while I provide almost daily updates on price of various commodities, including corn; I am generally not one to make a lot of comments on the grain markets.

However in the June 5th edition of the Sterling Market Commentary I did comment on the fact that the heavy rains had kept the farmers out of the field and it looks like a significant amount of the acreage that had been planned for corn production was not able to be planted by the deadline to produce of a crop that would be properly mature by harvest season. This is important, because this portion of northern Iowa contains some of the best farmland in the world; it almost never sees any significant form of a crop failure. This year is shaping up to be different.

It looks like approximately 1/3 of the acreage that was to be planted with corn did not get planted as planned. As I previously written in my June 5th posting, that acreage was to be switched to Soybeans; however now it looks like there is trouble in the efforts to get the soybean acreage planted. It has been raining frequently and heavily since I returned to Atlanta from Iowa, and the reports I am getting is that the farmers have not been able to get in the field to plant their Soybeans. This could very well be one of the lowest crop production years in a very long time for the upper Midwest. What this means for the markets is very simple, the harvest for corn and soybeans will fall far short of estimates and we will see dramatically higher prices for corn and soybeans.

So remember that on Friday June 14th, corn closed at $6.55 per bushel, and soybeans closed at $15.164 per bushel. Time will tell if I am correct, as come October the futures markets will be either higher or lower for corn and soybeans.

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