December 2012 corn futures declined by $1.44 (17 percent)
from the high on August 10 to the recent low on September 28. That contract has
managed a recovery of about $0.40 so far this month. November 2012 soybean
futures declined by $2.85 (16 percent) from the high on September 4 to the low
on October 3 and have rebounded about $0.45 since then.
Prices over the past two months for corn and the past month
for soybeans appear to be in the classic “short crop, long tail” pattern where
prices peak early in a year of sharply lower production and then decline in the
post-harvest period as the smaller supplies get rationed and production rebounds
in the following year. A change in the trend of lower prices will require an
additional supply shock or evidence that supplies have not been sufficiently
rationed. <Read More>
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