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Bearish corn

Agriculture.com Staff 07/21/2008 @ 8:58am

Historical Price Trends: best odds for the week of July 21, according to our HPT page is for CME October Lean Hog futures. Over the most recent ten years, odds of 80% for lower October Lean Hog futures than where they closed on Friday of the previous week. On average October Lean Hog futures 80% of the time has closed $0.95 lower. Please access our Historical Price Trend page for the balance of the commodities odds for next week.

For The Week: for the week of July 14th, September corn futures value decreased 12%, September soybean futures value decreased 10% and Sept CBOT SRWW value decreased by 3%.

For The Month: thus far for the month of July, Sept corn futures value down 17.4%, September soybean futures value decreased 8% and September CBOT SRWW value decreased by 6.3%.

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. A detailed technical look at the grains and livestock are available within our Allendale Advanced Charts.

Conclusion: every commodity listed above has breeched its #1 and #2 Moving average. Anticipate technical traders to sell rallies up against the lower Moving average as listed.

Wheat: short term technically mixed. To turn trader momentum to bullish a close above 8500 vs the Dec CBOT SRWW futures is needed. Fundamentals remain mainly neutral as strengthening exports and feedwheat use offsets the general trade perception of a larger 2008 supply. True the supply is bigger in 2008 but world demand continues to rise and projects world end stocks to use of 17.3% representing the second tightest levels dating back to 1980 and second only to 2007. Despite the tremendous weakness in neighboring corn and soybean trade pits on Thursday and Friday, wheat is performing well on its own.

Export Sales: of the total use for 2008/09, exports account for 43%. Thus far in the marketing year, cumulative sales are 27% higher than last year and 21% above the five year average.

Wheat Spread: The Dec wheat-Dec corn spread is strengthening. The spread closed at $2 premium the Dec wheat and is maintaining an upward bias. Technical based support is $1.78 with resistance at $2. A year ago the spread traded sideways from a low of $1.60 to $2.05 from July to late August and then broke out to the upside. Consider applying the spread on a pull back to present support and use $2 as the objective.

Wheat Crop Marketing: $6.18 cash wheat requires 4.5 cents of carry per month. If not hedged, make certain your local cash markets are offering you sufficient carry. The present Sept-Dec wheat futures spread is offering 24 cents carry (actual cost is 13.5 cents) Allendale has 65% of anticipated 2008 wheat production hedged in the Dec futures. We see no reason to hedge new crop above the 65% level we have on for now.

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