High food prices, too much speculation and now the “February Break”

Market Pulse: Feb. 22, 2011

March corn opened this past week at 7.0625 and closed the week at 7.0975. March soybeans opened the week at 14.19 and closed the week at 13.68. Finally, March wheat opened the week at 8.7650 and closed the week at 8.2275. High food prices worldwide have been in the news daily. Is it truly supply and demand or is it “speculation?” Could it be a little of both? Read the fundamentals below and you will see that while it is true supplies are low, the world has not run out of any of the above grains. World supplies in wheat, for example, are close to a 10-year average with regards to the stocks-to-use ratio. U.S. wheat supplies are well above average. Weather speculation, with regard to planting problems for the U.S., also is having an effect.

In most years, wheat prices could begin a seasonally weak period by January or February. Also, there is a well-known seasonal in corn and soybeans that traders refer to as the “February Break.” Both markets typically show a decline in February.

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