Are the highs in? Have we seen the lows for wheat?
One thing I don't know is the answers; but I do find a couple things interesting. First off beans versus corn; how long can protein and beans win? One thing that I look at is the two commodities against each other a year ago. Was corn greatly overvalued or where beans under valued? or is the price spread we see today in line?
My point is that beans are very near last years highs while corn is a about a dollar and a half away from it's highs.
My main reason for concern is the balance sheet differences. Corn if I remember right is expected to see a decline from last years balance sheet for the current marketing year. Estimates are around 800 million bushel carryout versus last years 1.1 billion bushel carryout (and very similar to last years projection around this time) Beans on the other hand have a increase over last year
So how much can we put into the new crop story for beans and the small SA crop that is driving beans up.....and really only adding mainly new crop demand.
I guess my point is that in marketing one might want to ask what is overvalued and what is undervalued; hold the undervalued and sell the overvalued.
Eventually all the fear will be built into the bean market and at the very least we should see some correction. Or perhaps a reversal of some sort.
Overall as you can see i am becoming more bullish old crop corn. New crop should be another story and maybe that is really what i am missing or is my logical reasoning behind the present price spreads. Then again maybe our 8.00 corn was just overvalued last year?
One thing is certain the markets feel tighter then they did last year at this time; even though for months the market has been talking about all the product that is sitting in the bins; yet it seems like alot of that product has slowly disappeared.
If the spreads are for real then fundamentally the price of the present corn crop is suppose to take out last year's prices.......isn't it?