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: July KCBT, CBOT and MGEX collectively fell below its respective key pivot points. Momentum bearish for wheat as the percent value lost in this most recent week is 4.5% for CBOT July, 2.2% for KCBT July and 3.7% for MGEX July. Dec corn value lost 2.2% while July soybeans gained 4% and Nov soybean futures gained 3.8%.
The Ranges: July corn futures range of trade 3500-3900, Dec corn 3550-3950, July Soybeans 7500-8100, Nov soybeans 7900-8300, July CBOT wheat 4750-5020, July KCBT wheat 4700-5050, July MGEX wheat 5050-5350. With the immediate trade focused more on technicals than fundamentals and increased volatility, we advise writing open orders with your Allendale representative using the ranges above and then agree upon appropriate risk protection.
Corn Fundamentals: Bearish to corn futures, trade floor and out in the Midwest perception is the possibility of more than the prospective 90.45 million acres of corn could be planted and the immediate weather. Bullish to corn is the anticipation for stronger than ave weekly corn export sales and the fact Argentina has filled its recently released 3 MMT corn export sales quota, just reopened a week ago after closing in Nov.
Progress and Conditions: USDA is scheduled to release its initial corn condition estimate Monday the 21st. Early trade estimates suggest a corn condition rating of 65% vs a five year ave of 65%. The five year ave planting pace for corn is 86% with next weeks actual expected to easily achieve that bar.
July Corn Futures: Technically neutral as it shifts below and above the key pivot point between bearishness and neutral, Allendale's most recent price projections suggest a low of 3350 and high of 3900 before futures expiration. Use the top side of the range as the level to begin to move 2006 inventory and the low to secure end user needs.
Ethanol: USDA estimates the 2007-08 marketing year corn use for ethanol at 3.4 billion bushels or 58% more than the 2.15 billion bu to be consumed in 2006-07. Based on the first six months of corn use in 2006-07, there is no need for USDA to increase its 2.15 bil bu estimate. Rather than have monthly use better 2005-06 levels by 34%, the amounts are only 27% better suggesting each of the remaining six months of the present marketing year now need to reach 41% better than yr earlier levels. Based on the most recent EIA monthly data's performance, USDA needs to drop its 2.15 billion bu estimate to a new level of 2.132 bil bu.