We saw a lot of action both up and down in the grain markets last week. By the close Friday afternoon at the close it turned out to be a good week even with the USDA Supply Demand Report Tuesday morning. The market and all the analysts expected the USDA numbers would be very bearish. The narrative was the USDA would dramatically increase corn and bean yields for this crop year and cut demand to carryovers would increase a lot. However, the published "average trade guess" was for very small increases in production this crop year.

Jerry Groskreutz / Townsquare Media

The production numbers the USDA released Tuesday morning were virtually unchanged from the October Report and very close to the "average trade guess." But, we saw corn and beans rally sharply, set back and then rally again. I have never seen this big a market reaction to a USDA Report that released numbers very close to the guesses and unchanged from the previous month's report?

attachment-AG MARKET RECAP 11-12

 

Maybe it is because the market and narrative was so bearish and when it wasn't we saw the rally? In addition there is likely another underlying supportive factor which is inflation. Inflation, typically increases corn and soybean prices. Unfortunately our input costs also increase! Click on the link and listen to Larry Olson with Agri-Sources LLC who was filling in for Gordy talk about the grain an livestock market action last week.