Crop size is a key question
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: For CBOT Dec wheat, Wednesday was the first time since Aug 28th when the futures close breeched the # 1 Moving average but not the # 2 MA. On Thursday the #2 MA was breeched during the side by side trade but futures did close above the 8380 level. A close below the #1 MA by Friday and directly on the #2 MA and the positive news for the weekly chart traders is a Friday close above last Friday's close. Using the upward trend which began on 7/3/07, futures could retrace to a level of 7180 to test the up trend. There was doubt on Thursday if corn could close above last Friday's closing price but met the challenge with positive results.
Can They Get Bigger: the questioned asked is if the corn and soybean yield increased from the August to September USDA crop production report, can these crops get bigger by the time we happen upon the October crop report? The answer is yes for corn and a 47% chance for soybeans. There have been 20 years dating back to 1965 when USDA found greater corn yields in the September corn crop report vs the month of August.
Most recently was in 2005 with an Aug to Sept increase of 4 bushels per acre and then another 2.9 bpa increase in Oct. In 2004 there was a 1 bpa increase from Aug to Sept and then a 8.5 bpa (record increase) from Sept to the October report. Of the 20 years when there was an Aug to Sept increase, 17 years there was an increase in the Oct report or 85%. The three years when the Oct yield was trimmed it was by an 1.3 bpa in 2006, 1.4 bpa in 1990 and 0.9 bpa in 1968 thus the frequency is very wide. Over the most recent ten years when USDA either raises or lower the bushels per acre for corn from the Aug to Sept crop report there has been 70% odds of an increase of 3.1 bushels per acre and could suggest a yield of 158.9 bpa in the Oct 2007 crop production report. The high end of the range has been 8.5 bpa for a potential of 164.3 bpa and a low end of .6 bpa for a potential 156.4 bpa. To surmise, odds overwhelmingly favor an increased corn yield when USDA releases its findings on October 12th. Discuss you trading plan according with your Allendale representative.
Weekly Export Sales: weekly export sales of 78.4 million bushels of wheat exceeded sales of 76.3 for the week ending 7/19 and nearly twice pre release expectations. The revised export target USDA released within its Sept WASDE report on Wednesday calls for 1.1 billion bushels for the 2007/08 marketing year. With 71% of the marketing year remaining, sales have reached 66% of the target and compares to a five year ave level of 45% of target. Sales have reached 713 million bushels vs 326 a year earlier and are 104% above the most recent 5 year average. The single largest buyer for the weekly sales report is Egypt at 21.8 million bushels or 28% of the total sales.