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Corn prices remain in downward trend
The Allendale 19th annual farmer driven crop yield survey results are
** Results suggest a corn yield of 152.48 bu per acre for production of
12.09 billion bushels. This compares to USDA's August estimate of 155
bu per acre and production of 12.288 billion bushels.
Results suggest a soybean yield of 38.43 bu per acre for production of
2.818 billion bushels. This compares to USDA's August estimate of 40.5
bu per acre and production of 2.973 billion bushels.
For The Week: for the week of September 1, December corn futures value
decreased 9.3%, November soybean futures value decreased 11.2% and December
CBOT SRWW value decreased by 6.3%. Oct crude oil futures value decreased
Corn Commentary: Friday's trade, still very much influence by outside
markets such as crude oil and the dollar. Fear continues of additional
hedge funds closing shop and liquidating commodities remains bearish to
suppliers but may be presenting opportunity for end users. According to the
most recent CFTC reports week net change for futures and options, shows
funds liquidating 4,697 contracts of corn, however commercials bought
12,822 contracts suggest end user demand likely on the rise.
Corn futures may find immediate direction based on the trades focus
leaning into the potential for even a normal frost/freeze which could trim
production. As we draw closer to the end of next week, the trade may begin
to consolidate as we approach USDA's Sept crop production monthly report.
The general consensus is the trade anticipating corn yield to be lower than
USDA's present estimate of 155 bu/acre.
Corn Technical Commentary: Dec corn remains in an immediate downward trend.
Futures closed below 62% retracement and psychological support of 5500.
Weekly charts have left a gap from 5640 to 5554 and may draw corn higher
once evidence of consolidation begins to form.
Vital Technical Indicator: the next projected major turn day is forecasted
for Sept 25.
Trade Idea(s): Stand Aside
Option Strategy(s): 9/5 Bought 1 600 call @ 22. Risk to 12. Obj 38
Soybean Commentary: soybean futures trade continues to exhibit the
influence it receives from outside crude oil futures. Add to Friday's
weakness the perception of bushel building rains received and forecasted.
However the trade must not be including the extreme east soybean belt which
remains extremely dry. Crop conditions fell a hard 4% for the week ended
Aug 31. A ray of light did present itself Friday as S Korea bought 110,000
tonnes of new crop USA soybeans suggesting world demand may be surfacing.
Adding weight to this thought is the fact funds futures and options net
weekly change are lighter by 680 contracts with commercial adding 1,760
Soybean futures may find immediate direction from similar outside
influences as the corn pit. Focus on crude oil futures direction and
frost/freeze discussion. The general consensus within the soybean trade is
for USDA to release a slightly smaller yield per acre on Sept 12th vs its
August estimate of 40.5 bu per acre.
Soybean Technical Commentary: Nov soybean futures Friday low of 11666 took
out the Aug 11 low of 11680 suggesting a new down trending target of 11250.
The weekly soybean chart has left a gap overhead of 13160 to 13050 and may
be viewed as an overhead target once chart consolidation forms and holds.
Vital Technical Indicator: the next projected major turn day in store for
soybeans is Sept 9, soybean meal Sept 11 and Sept 23 for soybean oil.
Trade Idea(s): there are no new futures only trade recommendations.
Option Strategy(s): Bought 12.80 call at 69 cents Risk of 54 cents
triggered on Friday. New option strategy update will be issued after
Wheat Commentary: two major commercial players within Australia estimating
a smaller crop despite recent beneficial rains. Announced Friday is a deal
in the works which would send Ukraine wheat to Egypt in return for gas.
Weekly export sales of wheat were rock solid, and should dispel ideas of a
strengthening US dollar limit grain sales to world demand. Quality problems
continue to surface for Russia and Ukraine but with potential volume
increasing, may compete as a feed source vs corn. Wheat remains in a demand
phase vs corn and soybean production phase. US wheat sales are running 4%
greater than its previous five year average. According to the most recent
CFTC reports week net change for futures and options, shows funds
liquidating 6,237 contracts of wheat, however commercials bought 7,699
contracts suggesting end user demand remains likely on the rise.
For the beginning of next week look for wheat futures to continue to
find the need to be attached to corn and soybean's direction as well as
easily influenced by a weak technical outlook.
Wheat Technical Commentary: the technical trend remain down. Friday's CBOT
Dec wheat low of 7436 was last experienced on 11/29/2007 and well off its
March 13 high of 12842. One year ago at the end of August, futures closed
at 7670. Similar to corn and soybeans, the weekly CBOT wheat futures have
left a gap between 7792 to 7552.
Vital Technical Indicator: the next schedule projected major turn day in
store for wheat is Sept 10.
Trade Idea(s): Dec CBOT Wheat:(09/05) Sell 1 @ 7880. Risk and reverse 8080.
Dec KCBT Wheat:(09/05) Sell 1 @ 8190. Risk and reverse 8390 Obj 7660
Dec Minn Wheat:(09/05) Sell 1 @ 8320. Risk and reverse 8540 Obj 8030
Option Strategy(s): there are no new options only trade recommendations at
Energies: - Crude oil ended today down $1.66 at $106.23. We can again
attribute weakness in crude to a strong dollar. Another contributing
factor was that bearish economic data regarding jobless claims added to
demand worries. The unemployment rate in August rose to the highest rate
in nearly five years. Energies as a whole are in a down trend and strength
is to be sold rather than weakness bought until the pattern changes.
Technical Commentary: Support in the October contract is $104.50 with
resistance near $113.00.
Trade Idea(s): Sell 1 October Mini-Crude at $112.85 and risk to $116.10
with an objective of $104.85.
Lean Hog Commentary: Futures managed to hold ground after it was confirmed
two plants had been delisted (or at least placed on hold) and suspicions
are that others will be announced. A Seaboard Farms representative
indicated the company is not currently delisted from Mexico's approved list
but has been placed "on hold". Today the CFTC revealed investment money is
selling. From 08/26 to 09/02 speculative commodity funds, who trade long or
short, sold a large 7,549 contracts while index funds, who are only long in
a package with other commodities, sold 2,202 contracts. (Making sure there
is no misunderstanding the long-only funds are selling but that is
continued liquidation out of the previously large long position.) We remain
bearish and will not pick a bottom at these prices. Our downside target is
$65 in the December.
Lean Hog Technical Commentary: The trend is down. If July's low of 6840 is
taken out we have a gap from 6560 to 6790 left from April to fill. The
market today attempted to get near that gap from 7040 to 7050 and failed.
Vital Technical Indicator: Next projected major turn day for lean hogs is
Trade Idea(s): Bear Spread - Bought the Feb/Sold the Oct at 650. Settled at
Trade Idea(s): Bear Spread - Bought the Feb/Sold the Oct at 650. Settled at
Option Strategy(s): Sold 1 December $72 call at the open (order was for
$2.15 or better) for $2.20, risk $1 from entry to $3.20, objective 0.
Live Cattle Commentary: Further selling based on outside markets and corn
pressured CME futures slightly. New lows for the downtrend were made in all
contracts through October 2009. This afternoon the CFTC indicated from
08/26 to 09/02 trading commodity funds sold 3,777 contracts while long-only
index funds sold 1,727 contracts. It is clear "investment" money continues
to drain from this market. For beef fundamentals Nebraska traded cattle
steady to $1 lower while live based cattle traded today at $99. That was
steady with last week. Lower supplies are here. They are falling and will
continue to fall into fall/winter which keeps us bullish. We are not buying
yet as the trade psychology remains bearish as shown above.
Live Cattle Technical Commentary: The trend is down. New lows for the
downtrend made today keep that clear.
Vital Technical Indicator: Next projected major turn day is the 18th for
Trade Idea(s): There is no reason to risk money when fundamentals and
technicals are at odds. Stand aside.
Option Strategy(s): Stand aside.
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
The Allendale 19th annual farmer driven crop yield survey results are released; ** Results suggest a corn yield of 152.48 bu per acre for production of 12.09 billion bushels. This compares to USDA's August estimate of 155 bu per acre and production of 12.288 billion bushels. Results suggest a soybean yield of 38.43 bu per acre for production of 2.818 billion bushels. This compares to USDA's August estimate of 40.5 bu per acre and production of 2.973 billion bushels.