Corn price range projection $2.75-$3.75
For The Week: for the week of November 17, December corn futures value decreased 11%, January soybean futures value decreased 6.3% and December CBOT SRWW value decreased 10 percent.
For The Month: thus far for the month of November, December corn futures value down 16%, January soybean futures value down 10% and December CBOT SRWW value down 7%.
Most Recently: the most recent time when Dec corn futures traded as low as they did on Friday was the week of Oct 12, 2007, Jan soybeans, the week of Oct 17, 2008 and Dec wheat, the week of June 1, 2007.
Corn Commentary: The combination of less than inspiring weekly export sales, active Midwest corn harvest, declining Gulf export basis, wetter forecast for dry Argentina, strong US dollar, plummeting crude oil futures and weak DJIA for the majority of the grain trade session on Friday, forced futures lower. Add to this combination potential beneficial rains for number two world corn exporter Argentina, a key commercial/financial player buying large levels of $3 March corn puts and a plethora of media reports regarding an ailing ethanol sector and global recession only added salt to the wound.
China's plan to buy 5 million tonnes of its domestic production of 156 million tonnes to support prices is failing. China announced it plans to now buy a total of 10 million tonnes of corn as cash prices continue to slide (see China soybean comments below). IF China corn purchase program is failing to perform as its soybean buying plan, containerized imports of corn is a possibility.
Bearish to corn is poor export performance and the weakness in crude oil and reformulated gas which is taking the wind out of the ethanol profitability.
At the close on Friday, the DJIA made a major positive recovery to close above 8,000 (President-elect Barack Obama has picked New York Federal Reserve President Timothy Geithner as his new Treasury Secretary), Jan crude oil closing $1 higher and US dollar weaker.
On the day it is estimated funds sold a stout 10,000 contracts of corn.
USDA released its weekly export sales results Thursday morning for week ending Nov 13 of 17.1 million bushels against pre release estimates of 15.7 - 19.7 million bushels. In order to keep a positive weekly pace on corn sales to reach a target of 1.9 billion bu for the 2008/09 marketing year, minimum weekly sales need to be 29.20 mil bu.
As tangible hard asset gold is gaining buying interest to protect the weaker global economy. It is interest to note, gold typically has been a precursor to the hard asset of corn.
Corn Price Projections: based on $60/barrel crude oil, Allendale's price range projection for corn is $3.40-$4.40. Based on $40/barrel crude oil, Allendale's price range projection for corn is $2.75-$3.75.
Corn Technical Commentary: Dec corn futures recent double bottom of 3602 was breeched on Friday adding technically related sell pressures. Based on weekly charts, support is 3350 and then 3080.