Market Matters Blog

Shhh... The Market Is Resting

Expect the grain markets to slumber today, waking only for fits and starts of trading. Volume should stay low, like it usually does before a big USDA reports. Thursday at 11 a.m. CDT, USDA will release its acreage and quarterly stocks figures, and then the market will roar to life for a few furious hours of trading.

Darin Newsom discusses what to expect from the report in our preview story in Ag News. In short, corn acreage is expected to fall between 96.8 million acres and 98 million acres. Soybean acreage is expected to come in between 77.5 and 80 million acres, although as Darin notes, this boost from last year's planted acreage isn't indicated by the soybean to corn price ratio. Instead, he argues the acreage gain is necessary to offset the rapid decline of domestic soybean stocks and USDA's need to keep 2012-13 ending stocks -- which become next year's carry-in -- above 100 mb.

So while you're watching the proverbial paint dry (it's not warm enough for me to accuse you of watching the grass grow), perhaps it's time to look at what's happening in other commodities. West Texas Intermediate crude oil futures have gained more than 4% over the past three trading sessions while gold has fallen back below $1,600 an ounce, despite the latest Eurozone banking crisis in Cyprus.

The oil rally's been fueled by two good economic numbers: home prices unexpectedly surged in January and durable goods orders rose, also higher than expected. The hope is that higher home values will make consumers more comfortable about their finances, and therefore encourage more spending. Durable goods orders show that yes, consumers are spending more. Traders hope this translates into more gasoline purchases. Closing above $96 on Tuesday, the oil market's broken out of the $90-94 trading range. While there are no indications oil prices are going to keep running higher and higher, it's an important market to watch as you start fueling up yours tractors for spring fieldwork and planting.

And then there's gold, the safe haven market. It's back below $1,600 an ounce despite Cyprus's bailout. But as an article in the Wall Street Journal today suggests, it's still strongly supported by central banks. Central banks have been net buyers of gold for 23 consecutive months, according to data from the International Monetary Fund, and the WSJ article quotes a trader as saying that is keeping gold from falling out of bed. Paired with a stock market rally and rising oil prices, the numbers are lining up to tell us the general economy is getting back on track, even if overall growth is still slow.

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