After closing lower four days in a row, beans finally rallied Wednesday. Technically beans were over-sold, but what seemed to get the rally going was South American weather. Parts of Argentina are still dry and other areas received flooding rain. The last report I saw said about 20-25 percent of the beans in Argentina still have not been planted. Traders and the USDA are expecting another year of record production out of Argentina and Brazil. Maybe some are starting to question those assumptions?

Corn even managed to rally Wednesday about 4 cents a bushel. It seems corn has been "dead in the water" for months. All you hear from analysts  is the large corn stocks available around the world. This morning on the Brownfield Managing For Profit program an analyst with AgriVisor said there is reason to be optimistic for corn prices. The USDA is assuming very large corn stocks in China, but do those huge corn stocks really matter?

This analyst with AgriVisor said China does not import or export corn on the world market. What difference does it make if they have 1 billion bushels of corn stocks or 5 billion? So, if you subtract the corn stocks the USDA assumes are in China from the world carryover numbers, the picture is quite different. In fact, if you look at the world carryover corn numbers today without what is supposedly in China, world carryover is as tight as it was in January 2012! To me that does not justify corn futures around $3.50 a bushel.

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