Agricultural News
Fund Sell-Off Fuels Lower Grain Prices, Anderson Says
Thu, 10 Jan 2013 16:53:03 CST
In the preview of his market analysis on this week's SUNUP program, OSU Grain Marketing Specialist Kim Anderson says a lot of producers have been scratching their heads lately wondering why with worsening crop conditions, grain prices are dropping.
"The market has fallen off over a dollar in the last several weeks. A lot of people are saying 'Why are prices going down with crop conditions so bad?' What we've seen is that we came into early December with the funds holding a lot of long positions in both corn and wheat and they started liquidating those long positions and they liquidated them throughout the December time period. So, with very little change in the supply and demand situation for corn and wheat, the funds were selling their contracts. There were very few buyers. You know, we talked about the holiday time period, a very thin market and therefore prices fell."
Anderson says those who want to blame the funds for dropping prices might do well to remember it was the funds that kept wheat prices up in the $8.50 to $9 range allowing producers the opportunity to sell at those prices.
He says that farmers looking at their fields and not seeing much at this point in the way of a crop for next spring are scratching their heads and wondering why futures prices still seem so low. In looking at July contracts trading in the $7.60 range currently, Anderson says that figure is still more than a dollar above the average June price over the last five years.
"If you can forward contract for $7.60, $7.70, that's a $1.30 to $1.40 above the average price, that's still relatively high. And it's above that relative high and they're offering $7.60 because of fields like this."
Anderson says the USDA reports out Friday morning will set the basis next week for grain prices over the next few months.
Also on SUNUP this week:
--Jody Campiche has an update on the Farm Bill extension and what that means in 2013.
--In the Mesonet report, Al Sutherland looks at all the changes Mesonet has made in the last year.
- -In Cow-Calf Corner, Glenn Selk talks about the best way to warm a hypothermic newborn calf.
--Then, Craig McKinley breaks down the important considerations when starting up a Christmas tree farm.
--In Shop Stop, Randy Taylor and Wayne Kiner show the proper way to mark and build a metal box.
--Derrell Peel explains why he expects a decrease in beef production during 2013.
--Finally, we head to the Meat Goat Boot Camp and show why this class has become so tight knit.
Catch SUNUP:Saturdays at 7:30 a.m. on OETA.
You can watch archived episodes on the OSU website by clicking here, and on Youtube by clicking here.
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