Last week the grain markets completed their correction and so far this week we have seen nothing but consolidation trade. 


Last week the grain markets completed their correction and so far this week we have seen nothing but consolidation trade.  
Traders are trying to sort out several different demand issues at the moment, which is the main reason for the sideways trade.  
First, we still don’t know how the Japanese earthquake/tsunami is going to affect demand for US products.  
Some of the Japanese livestock industry may be threatened due to radiation contamination, which would result in lower demand for US corn, but would likely increase demand for US beef, pork, and possibly dried milk, wheat and rice.  
The increase in demand for our meat, however, depends greatly on how the Japanese economy handles the disaster.
Second, there has been legislation introduced that would eliminate the ethanol blenders credit immediately, which could affect the ethanol industry, but with the price of ethanol about 50 cents below gasoline, ethanol is still a cheap fuel alternative, so the loss of the blenders credit might not have much effect at all.
The last demand issue grain traders are dealing with is the persistent rumors that the Chinese have purchased more US corn.  We hear the rumors, but there has been no confirmation of the business, which leaves a lot of uncertainly.  
Extra demand from the Chinese would at least offset any potential losses from Japan and could tighten our already extremely tight stocks.  Confirmation of the Chinese business would be a big boost to the market and probably send the old crop contracts back to the contract highs.  
Schwieterman Marketing, L.L.C. specializes in risk management and cash grain and livestock marketing plans.  For information on the markets or our marketing service you can contact Bret Crotts at 888-437-9131 or bret@swbell.net.
The information contained herein is based on data obtained from recognized statistical services and other sources believed to be reliable.  
However, we have not verified such information and we do not make any representations as to the accuracy or completeness.  Past results are not necessarily indicative of future results.  
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