Grain trade preparing for August 12 report
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Historical Price Trends: best odds for the week of August 4, according to our HPT page is for CBOT September soybean meal and wheat as well as KCBT Sept wheat, all suggesting 60% odds of higher trade by the end of next week, vs where futures closed on Friday, Aug. 1. However the increase in value is not much different than the potential 40% odds on loss. With the information at hand reward to risk may require staying sidelined for next week for those three commodities. Please access our Historical Price Trend page for the balance of the commodities odds for next week.
For the week of July 28, September corn futures value decreased 3%, September soybean futures value decreased 3% and Sept CBOT SRWW value decreased by 2%.
For the month of July, Sept corn futures value down 20%, September soybean futures value decreased 12% and September CBOT SRWW value decreased by 9%.
Technicals: For the short term trader, Allendale uses its own unique custom Moving Averages to monitor price momentum, define key support and resistance levels as well as advise where key pivot points are located when bulls may turn bearish and bears to turn bulls. We also include last weeks closing price for the weekly chartist as we draw closer to the end of the week to anticipate the possibility for futures to have a positive weekly close or if weakness is ensuing.
Conclusion: Technically it is the wheat which was able to close above the key #1 and #2 Moving Averages however support ID immediately below and must hold early next week to instill bullish confidence.
Preparing for August 12: The trade's awareness of the forthcoming USDA crop production report is growing. Much of last week was spent with loose-handed corn yield estimates discussed within the corn pit. Range of guesstimates are from a low of 151 bu per acre to as much as 160 bpa. Allendale clients asked what has been the history of yield adjustment from the July to August crop production reports? The following is Allendale's
Of the past 10 years, July to August corn yield adjustments, 5 years when yield was increased an ave of 2.98 bu per acre, largest increase 4.9 bpa in 2000, smallest increase .4 bpa in 1998. Five years when yield was decreased an ave of 4.68 bu per acre, largest decrease 10.6 bpa in 2002, smallest decrease 1.1 bpa in 1999.
USDA is presently using corn yield of 148.4 bu per acre. With an average increase of 2.98 would be 151.38, largest increase may be 153.3, smallest increase may be 148.8. With an ave decrease of 4.68 would be 143.72, largest decrease may be 137.8, smallest decrease may be 147.3 bpa.
Conclusion: odds have been 50/50 for an increase-decrease and Allendale would suggest despite increasing good to excellent crop conditions of 4% since the July report, we do not anticipate a significant increase in yield. Allendale needs to remind of the much less than desirable emergence and its potential impact on yield. Allendale does respect the fact USDA's World Outlook Board may have restraint placed on it to keep ideas/perception of food price inflation control. Allendale plans to release its official production and yield estimates next week in anticipation of the August 12 report.