Never ending corn end stocks to keep lid on market
Allendale, Inc., corn fundamentals: domestic usage remains supportive to corn futures. The trades perception of the "never ending growing " end stocks could likely keep a lid on futures performance this week. USDA will release FIVE major fundamental reports Thursday morning at 7:30 am central time. When the dust settles the trade is looking for bearish results and a weak futures day.
End Stocks to Use: domestically at 22.5% end stocks to use, have not seen this level since 1992 when futures bottomed at 2040 and then proceeded to stage a long term rally to 3116 by Jan of 1994. World end stocks to end use are presently 15.6%. This level is the second tightest on record dating back to 1980 and only in 2003 were they tighter at 13.8%. Did you know since 1990 there has been only one other span of time when end stocks continued to grow 3 consecutive years? That was 1995 into 1998. Stocks grew from 426 mil bu in 1995, to 883 in 1996, to 1.308 bil in 1997 and then topped at 1.787 bil in 1998. It represents a 14.2% increase in stocks to use domestically. Since 2003's 958 mil bu stocks are now projected at 2.419 bil for a end stocks to use increase of 13.1% increase. This could signal a near top. At the same time world end stocks to use only managed growth of 7.3% from 95 into 1998 while thus far from 2003, world end stocks to use growth has only managed 1.8% growth. This likely suggest the world is simply out pacing production. The world stores are in the USA and with a pending La Nina in 2006, it good knowing the cupboard is full at home.
Corn Blend of 13 Technical Indicators: if you have access to our Allendale Advanced Charts please look at tonights March corn chart. It does imply tonights close teeters on key support. CBOT Mar corn futures close of 2142 finished BELOW last Friday's weekly chart close of 2156 which in turn did finish above the prior weekly close of 2140 which finished above the previous Fri's close of 2074 and the Friday before of 2036 and the week before 2032 and the preceding weeks 2026, a very impressive string of weekly closes and now last months close of 2156 is all too important for this month to close above. March futures did close BELOW the first two of three Allendale custom Moving Average of 215 and yes again 215 but above a very important level of 2110. Two close below this level sets the stage for a move to at least 2074. We need to explain gulf basis is not providing a equal cent for cent exchange as futures drop. The blend of 13 short, medium and long term tech indicators suggest a futures buy signal of 24% vs the previous nights 64% buy level, weakening.
Price Proj: Brand new 2006 July corn and Dec corn futures long range price projections will be unveiled at our Jan 21st 16th annual outlook conference, we invite you to attend.
Hedgers/Marketing: one week ago we had missed moving the lions share of old crop corn by 1 cent. We took advantage of our patience and were able to move 55% of old crop to cash sales. This leaves us with a balance of 20% to work with by either walking it off farm, by feeding it to cattle, selling to ethanol processors, blend into the 2006 crop because of the impending La Nina or utilizing a basis and futures opportunity in the early spring BEFORE planter begin to seed the 2006 crop. New crop hedges are 50% complete with complete explanation for further hedges and option plans explained within our "Hedge Advice" page of the Allendale Advisory Report.