Feedgrain Market Outlook
Vol. 18 No. 7 - January 29, 2010 - PDF format
Market Situation
U.S. weekly corn export sales commitments were off last week’s marketing year high but still on pace to meet projections. This week’s sales were 35.5 million bushels, down from 63.4 million last week.
With lower corn prices this week, the net revenue equating soybean to corn price ratio in Illinois farm budgets fell from 2.6 to 2.5. This week’s ratio of average prices still favors corn.
The Commerce Department reported that GDP in the 4th quarter grew 5.7%, stronger than most economists had expected. In addition, there was an above expected increase in the widely watched University of Michigan Consumer Sentiment Index, up to 74.4 from 72.8. A reading of 73 was anticipated. One analyst suggested that these reports might soothe some fears that the stock market had run too far ahead of measurable economic recovery. But lingering unemployment and subdued consumer spending remain formidable economic obstacles to overcome.
With little fundamental news to move grain prices, outside markets hold sway. A stronger dollar and lower crude undermined grain prices and investors are still wary of economic fundamentals.
This week’s commitment of traders shows index funds holding steady but hedge funds going net short. Net long contracts held by index funds increased by 2,182 contracts to a new record. Hedge funds were net short this week by 7,478 contracts down from 56,257 net long contracts last week and 206,545 net long positions at the beginning of January.
| Friday January 22 | Friday January 29 | Net Change | Percentage Change | |
| Dow Jones Ind. Avg | 10,172.98 | 10,067.10 | -105.88 | -1.04% |
| Mar ‘10 Crude Oil | 74.45 | 72.81 | -1.64 | -2.20% |
| Mar ‘10 Copper | 3.3560 | 3.0405 | -0.32 | -9.40% |
| Mar ‘10 Dollar Index | 78.425 | 79.635 | 1.21 | 1.54% |
| Mar ’10 Corn | 3.6475 | 3.5650 | -0.0825 | -2.26% |
| Dec ‘10 Corn | 3.9725 | 3.9075 | -0.0650 | -1.64% |
| Dec ‘11 Corn | 4.2350 | 4.0925 | -0.1425 | -3.36% |
Market Strategies
We are entering the time of year when corn prices would normally be in an uptrend based on seasonal tendencies. Since the release of that bearish Crop Report on January 12th, the dollar has rallied, crude oil has fallen, and prices have sagged. I still look for price strength this spring as we get a better handle on final production and ending stocks and economic conditions improve. I am not interested in hedging at this level and will continue to ride out this move.
Mark Welch
Texas AgriLife Extension Economist
401 C Blocker Building
TAMU 2124
College Station, Texas 77843
Tel. (979)845-8011
Fax. (979)845-4906
JMWelch(at)ag.tamu.edu
The opinions and recommendations expressed are solely those of the author and are intended for educational purposes only as part of the Texas AgriLife Extension Service. Texas AgriLife Extension Service assumes no liability for the use of this newsletter. Educational programs of the Texas AgriLife Extension Service are open to all people without regard to race, color, sex, disability, religion, age, or national origin. The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas Cooperating