Corn exports big, short covering holds up soybeans
Allendale is registered with the CFTC and NFA and is a member of the NIBA. The bottom line is we are a regulated firm which can be extremely important in this day and age.
Corn Fundamentals: weekly export sales were huge when data was released this morning. Our five yr ave history suggest this time of year, weekly sales results are typically 35 to 40 mil bushels. This mornings report came in at nearly 85 mil bu, with Japan accounting for over a third of the purchases. A combination of cheap ocean freight, more than fair economic value of the corn, drop in the USA dollar, investment fund seasonals building and stock building because of a potential La Nina are likely to have all contributed to the heavy purchases.
Export Sales: Allendale's research suggest the present marketing year pace is now 1.850 to 1.89 bil bu vs USDA target of 1.85. Year to date purchases are now 1.024 bil bu vs year ago levels of 1.012 bil and 1.117 billion in 2003/04. Sales as related to the percent of USDA's target filled are now running 2% above the 5 yr ave pace.
Historical Price Trends: please take a moment to glean our Allendale HPT page. Specifically we want you to focus on the week of Feb 13-17. Notice how corn, beans, and soybean meal futures have responded in the reward to risk category. Add in the information below regarding the week of Feb 11, 2005 and you may realize the funds impact on futures. If there is a bear for next week, we would likely give the nod to CBOT wheat, which has had a tendency to carry on for the 4 week cumulative.
Corn Used for Ethanol: finally data from the EIA has been released for ethanol production and stocks for the month of November have been released. Subscribers to our website product may view the ethanol production and stocks graphs in the Special Reports area. Nov prod at 8.329 mil barrels is the second highest on record. That number was also 19% higher than last Nov. It is already factored in however. USDA is currently suggesting old crop corn used for ethanol will total 1.575 billion bushels. That is 19% higher the last year. Main point here is we are right on pace. Ethanol stocks at 5.720 million barrels are low. It is the lowest stock level for November since 2001. Production is soaring and stocks are still very low.
Hedgers/Marketing: Allendale sold its remaining balance of 2005 corn prod to the cash markets when futures hit 2180 vs March futures on Wednesday. Based on our July corn price projections released last Saturday, we set a target of 2180 vs the March futures or 2350 vs the July for Feb delivery as the cash market does offer us 3 cents to wait one week and a day rather than deliver in the month of Jan. Our basis data does suggest a notable drop before planters hit the field. 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. We do suggest adding at the money new crop calls to the hedges placed when we have two successive closes above 2540.