Traders eye freeze notice
Corn: For once this market traded much the way it was expected to. With some early light selling followed by some clean up buying and ending unchanged. There is a good likelihood that Monday will see some more calm trade ahead of the supply/demand report Tuesday.
One private company put out their private estimates on planted acreage with an increase of 800,000 acres to 89.6 million. We want to note that the USDA has only changed acreage on this report one time in 1996 so we do not expect any actual change in acres. We will have to wait until the June 30th report to see any changes there. When it comes to weather we did see a change in temps for the weekend. A freeze line was moved farther to the south which now extends as far as southeast Colorado for Saturday and the northern 1/3rd of Illinois on Sunday. This is where the late day support likely came from but was sold back before the close. We will need to keep an eye on this over the weekend because even if the corn is too small to be damaged it is still possible that traders will become concerned and buy on Monday. If that is the case, then let them buy away, it will give us another chance to sell December in the low 390's. There is little reason to expect a breakout of the current range corn is in. Shocking news on the Tuesday report could be enough to break this sideways trend but we do not feel this report will provide that kind of excitement. While there is little doubt they will need to raise demand numbers it is also likely they will raise yields and generate a neutral report.
Direction: Strong resistance can be expected at or near the 395 level with support expected near 380. Lately this sideways range has narrowed even further setting up a potential breakout. As of now there still isn't enough news for any significant movesâ€¦Ryan Ettner
Working Trades: Â·(03/24) Bought July 380 call/sell July 440 call/sell July 340 put 4 1/2, risk to -4, objective 19. Closed 5 3/8. Â· (05/04) Bought July 365, risk 358, objective 382. Closed 372.
***Disclaimer*** The commentary and trades below are derived from technical indicators provided in our Allendale Advanced Charts pages and may not correspond with the fundamental commentary above.
Advanced Charts Direction: Corn held above the moving averages and short-term uptrends to end the week today. Volume was much lighter than yesterday, so we may not see strength continue into Monday's trade. We remain short from 375 near the recent highsâ€¦Monica Moehring
Big Picture for Cattle: Last night we noted our 2010 beef production forecast, at 25.556 billion lbs., would represent a 1.6% decline from last year. One exciting statistic is that is the smallest production since 2005. However, production is but one component of the US beef supply. Tonight we can go over how the second section of the beef balance sheet. As you are aware the US has been a net beef importer since modern times (1970). We import lower value product and export the high value product. On a value basis we are net exporters. Due to a few factors, the net import level in 2010 will be the lowest since 1997. We are assuming imports, at 2.501 billion lbs., will be down 5% from last year. On the export side, we are looking for an 11% increase this year at 2.078 billion. This represents the smallest net inflow of beef (423 million lbs.) in 13 years. It helps draw down the supply of beef left for the US consumer to 26.081 billion. Get thisâ€¦that number presents the smallest supply left in the US since 1997. That is exciting by itself. See the chart placed on the Food for Thought page of this report. We have not even finished the remainder of the balance sheet yet. That total supply number needs to be divided by the population to make a per capita consumption number. As the US population rises by around 0.9% each year, this will be the lowest per capita supply in decades. We cover that end of the supply argument, which is outrageously supportive, counter it with some realistic demand constraints, and release our latest price outlook early next week...Rich Nelson