Did Japanese “demand destruction” cause corn and beans to drop last week? Or was it something else?

Market Pulse: Mar. 21, 2011

Fundamentals

Corn fundamental outlook — Bull market correction — Corn prices retreated as investors liquidated their commodity holdings and moved into cash on the uncertainty caused from Japan’s earthquake and nuclear crisis. However, the longer-term trend remains bullish as the USDA predicts U.S. corn supplies may be restricted for at least the next year or two as the corn market tries to recover from the very tight U.S. supply situation. The corn stocks/use ratios are extremely tight with the U.S. stocks/use ratio of 5.0% matching the 7-decade low posted in 1995- 96 and the world stocks/use ratio at 14.7%.

Soybean fundamental outlookBull market correction — Soybean prices are in correction mode on concerns that Japan’s quake disaster may slow the global economy, the prospects of record U.S. acreage this year and improved weather in South America. However, prices remain supported by the USDA’s cut in its U.S. carry-over estimates and by strong Chinese demand. The U.S. stocks/use ratio is tight at 4.2%, but the world stocks/use ratio is near average at 22.7%.

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