It is now 11 weeks into the MarketMaxx contest and the volatility in soybean markets has created some real trading opportunities. Odds are good that some major swings are ahead in the corn market as well.
These are key fundamentals that have been the major market factors so far this year.
Corn exports have been slow with USDA cutting projected exports to 1.9 billion bushels. Ending stocks were increased to more than 2 billion bushels.
Global feed wheat supplies are increasing and overseas feed buyers are using more wheat and less corn.
Ethanol use continues to grow and is now more important to determining corn prices than corn exports.
Soybean exports have stayed very strong and odds are good USDA will cut projected ending stocks in the next USDA Monthly Supply/Demand report.
Livestock farming remains very profitable in the U.S. and throughout the world. Egg and broiler production continues to increase by 2-3%. A lot of new hog buildings are now going up, too.
U.S. soybean processors have been aggressively bidding up soybean cash prices as farmer selling has been slow.
Here are six key fundamentals to watch in the next 30-90 days.
Weather and crop development in South America. The projections for a 64 million metric ton crop of soybeans in Brazil appears to be history. The corn crop is likely to be smaller as well.
Brazilian soybean farmers have been tight holders in selling soybeans — so far. Will they run out of room and be forced to dump soybeans into the low price and profit level that is now being offered?
Will the weak U.S. dollar and strong Brazilian Real keep U.S. exports strong as exporters compete with processors for U.S. soybeans?
Spring weather in the U.S. will become the dominant price fundamental as strong global usage makes getting another large crop in the U.S. very important in 2005?
Will U.S. farmers shift more than 2 million acres from soybeans over to corn? That is about the average trade guess. Any more or any less will be an important fundamental that flows through to the ending stocks bottom line.
Will commodity funds that have been carrying record short positions get long as we enter the critical planting time period?
We are entering the time when prices will swing out of the winter doldrums, and odds favor some major price swing in the next 30-90 days.