A recovery for corn futures
Technicals: Old and New crop corn and soybeans and new crop wheat. 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.
Observation: a lower weekly close for all the above with the exception of CBOT soft red winter wheat. Technically viewed as bearish. However even the CBOT wheat is not without some minor problem as Friday's close did settle under the key #1 and #2 Moving Averages which could be viewed as immediate resistance. Even after the wide range of trade on Thursday, MGEX wheat futures are able to maintain long term trendline support.
Observation: old crop corn cancellations with Japan responsible for canceling 2006-07 but rolling into a new crop year. Do not rule out more old crop cancellations for corn and soybeans with only 3 weeks remaining in the 2006-07 marketing year and futures falling. Wheat export sales are very, very strong. Wheat sales of 43.6 mil bu are better than the 5 week ave of 24.2 mil bu and 16.1 mil bu 10 week average. Soybean shipments could miss USDA target of 1.1 bil bu by 40 mil and if so we roll into the carry in stocks for the 2007-08 marketing year.
Wheat Price Projections: Those with access within our website, Dec wheat price projections show how recent values have exceeded our maximum target of 7000. You can see how the seasonal tendency change in momentum are running about 30-40 days advanced. Given the present state of affairs with regards to the stock and financial market instability, we may look to the seasonals and be prepared for a price break without much if any notice.
Fundamentals: Remain very strong with the most obvious evidence of the start to the export sector with actual sales running 99% greater than the five year average. Those with access to our Wheat Export sales graph within our website, look at how strong wheat sales are vs year ago and five year averages Both the EU-27 and Australia trimmed production estimates on Thursday adding solid fundamental support to USA wheat futures and cash prices. With regards to dry Queensland and New South Wales, beneficial rains are forecasted this weekend and mid to late next week Bearish to wheat is the technical picture which could suggest if another big round of commodity liquidation occurs in soybeans and other soft ag commodities, stops could be triggered and computer trade create significant damage. Thursday the resolve of the fundamentals were tested on the initial few hours of trade but remember, world starch stocks are at their lows and not likely to be repaired overnight.
How Much More?: How much USA wheat has Egypt purchased this marketing year and just how much more could they secure? As of Aug 2 of the 2007-08 marketing year, Egypt has purchased 1.32 million tonnes of USA wheat with only 2001-01 larger at 1.869 million tonnes. The 1.32 MT represents a 184% year on year increase. Include Tuesday's purchase and the estimated amount of USA wheat purchased by Egypt is 1.735 million tonnes (63.8 mil bu).