“Overall, this report is going to fundamentally change . . . how people at look at markets.”
That’s what one Chicago grain market analyst described the USDA’s stocks and crop production reports this morning, which found that corn stocks are now lower than even the lowest trade guesses, and that acreage is also below estimates. This means that corn is suddenly much shorter than expected and traders aren’t prepared for this.
“I’m looking for volatility,” another Chicago analyst said after the report came out.
Look at what corn futures in Chicago did in response to the report:
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This could be the thing that boots the crop markets decisively higher. There are all the seeds planted out there in the world to bloom into a bull market for the grains – weather concerns in China and Russia, problems here in Canada, smaller corn stocks in the U.S. – and today, so far, the markets have rallied.
Jim Bower, of Bower Trading, said this is the excuse the market needs if it wants to rally.
“The trade has been given a very fundamentally supportive report and the trade has to follow through . . . ” he said.
If traders don’t bid up prices decisively higher, then they could stay mired in the presently disappointing and stagnant range, Bower said.
So that’s what this report does: it gives the market a reason to begin a rally.
Cross your fingers.
