2. The Road Ahead

Before the next report releases on November 8th, I think the price change of crops will be hard to predict. Therefore the short-term downward trend may change very rapidly. The weather change would contribute to the supply analysis in the next year.

According to what Telvent DTN Inc. said in a report yesterday, showers forecast for the soybean- and corn-growing areas in Brazil this week will be mostly light and temperatures will remain above normal after dry weather depleted soil moisture, therefore the crop stress may return to Brazil.

Also in Argentina, the largest soybean shipper behind Brazil and the U.S., heavy rains this month may delay planting, and also affect corn and other winter crops.

According to the recent October report on cereal supply and demand brief, a decline in world cereal production in 2012 from the record in 2011. The decrease will result in a significant reduction in world inventories by the close of seasons in 2013 even with world demand sliding as a result of high prices.

So far, based on the above information, I would still hold a short position on the future contract in 2012 and long position on 2014 or 2015’s future contact. We will see what will happen. I will pay attention to the next report coming on November 8th. I think I will take advantage of the release date.

References:

http://www.fao.org/worldfoodsituation/wfs-home/csdb/en/

http://www.bloomberg.com/news/2012-10-24/soybeans-climb-on-concern-crop-stress-may-develop-in-brazil.html