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Domestic useage key to corn futures prices

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.

La Nina: this particular development will be discussed throughly at our
16th annual outlook conference
http://www.allendale-inc.com/products/events.aspx
Jan 21st at McHenry County College, Crystal Lake, IL along with the
outlooks for grains and livestock, marketing plans, hedge advise. Trade
ideas will be presented for grains and livestock as well as a host of other
futures markets such as energy, softs, currencies, metals and interest
rates. You must register to attend 800 551 4626 or on the Internet site
address above.

Corn Fundamentals: domestic usage remains supportive to corn futures as
viewed below in individual reports but the present trade is much more
focused on export sales performance and projected domestic end stocks which
are bearish.
End Stocks to Use: domestically at 22.5% end stocks to use, have not seen
this level since 1992 when futures bottomed at 2040 and then proceeded to
stage a long term rally to 3116 by Jan of 1994. World end stocks to end use
are presently 15.6%. This level is the second tightest on record dating
back to 1980 and only in 2003 were they tighter at 13.8%. Present dynamics
suggest it could cause the world consumers to seek USA supplies for its
needs. China's Ag Minister this week announced a grain deficit is likely
for 2006.

Big USA crop?, certainly, however even bigger demand!
Blend of 13 Technical Indicators: CBOT Mar corn futures close of 2156
finished above last Friday's weekly chart close of 2140 which finished
above the previous Fri's close of 2074 and the Friday before of 2036 and
the week before 2032 and the preceding weeks 2026, a very positive
development. March
futures did close above key Moving Averages of 213.212.208. A close below
208 sets the stage for a return to bearish ideas. The blend of 13 short,
medium and long term tech indicators suggest a futures buy signal of 8% vs
the previous nights 40% buy level, weakening.

Price Proj: based on our recent research a move to 2220 as we enter the new
year could be the dominate trend. By spring July corn futures are estimated
to visit the 2600 level.

Hedgers/Marketing: we missed moving the lions share of old crop corn by 1
cent this week. Based on price projections above, we will be patient.

Weekly Export Sales: our most recent research suggest sales need to get
moving immediately. Year to date marketing sales pace suggest a final
target of 1.729 bil bu. Last four weeks sales pace suggest a final target
of 1.781 bil bu. Present USDA has projected final export sales @ 1.9 Bil bu

Ethanol Production: the most recent energy data available found October
production at 8.3 mil barrels, 19% higher than yr earlier levels. Based on
early performance data, USDA needs to add 7 mil bu of corn for usage. Multi
year performance data suggest production is expected to trend higher with a
noticeable historical dip in Feb.

Wheat-Corn Spread: highly noticeable within our "Players" page of this
Allendale Advisory Report Funds were taking profits out of the March
wheat-corn spreads. Fundamentals suggest wheat is expected to outperform
the corn move based on wheat end stocks and the developing drought in
southern Plains wheat country. Technically, immediate resistance appears to
be $1.30 premium the wheat, with support at $1.20. Provided our ten yr
history on wheat futures begin to rally in Jan, pull back to near Dec lows
and then begin to rally again, take out the Jan highs as they have trended
higher into the month of May.

Historical Price Trend Page: Please glean our updated HPT page of the
Advisory report to see how corn, beans and wheat may not much excite for
next weeks trade but the meal and cattle offer noticeable odds.
Position: Traders, after taking gains out of longs in the March futures and
Minneapolis National Corn Index, we are willing to stop ourselves into a
short futures position as outlined in our Grain Trading Strategies page for
March CBOT corn futures but not the NCI.

Soybean Fundamentals: once again its the domestic data in the form of
crusher margin data and soybean crush which is supporting futures as well
as a developing dry weather condition in Argentina. However it is the
export data along with domestic and global end stocks to use which weigh on
the overall performance of futures.

Export Pace: Our custom weekly export sales charts suggest, sales continue
to be large enough each week to meet the necessary amount in order to reach
USDA's export target of 1.020. However the trade is enamored with
performance thus far in the marketing year which suggest a pace of 885 mil
bu. The recent four week data could be to the rescue as sales have
performed well enough to suggest a export target of 953 mil bu.

Blend of 13 Technical Indicators: CBOT MARCH soybean futures close of 6134
finished below last Friday's weekly chart close of 6250. This is a first
since last Friday's futures did close above the previous Friday's close of
6024 as well as the Friday before weekly close of 5784 and the week before
of 5704 and the preceding weeks 5622. This may now suggest a period of
consolidation as S America begins the early stages of its growing year.
Futures closed below the key Moving Average of 614 but above 608 and 601.
Trade below 6000 could prepare sell signals to fund speculators. The blend
of 13 short, medium and long term tech indicators suggest a futures buy
signal of 16% vs the previous nights 56% buy signal, weakening.

Soybeans Crushed for Soybean Meal and Soybean Oil: based on our research,
crush margins suggest the processor is fully prosperous. US Census Bureau
data shows 152 mil bu of beans crushed for the month of Nov which is a
record amount dating back to 1999/2000 mkt yr. Based on the performance
thus far this year, USDA needs to add 4 mil bu of beans for crush usage.

Wheat Fundamentals: as we explained in detail this week, the southern
Plains Hard red winter wheat crop may be developing a major dent as drought
is very apparent in Texas and Oklahoma. As serious is the extreme warm
temps which may likely pull wheat out of its winter dormancy and the first
breath of a return back to freezing temps could launch futures higher.
Please read this mornings Grain Fundamentals news for the latest on the
drought in the southern Plains and the long term forecast supplied by the
NOAA's Climate Prediction Center
Wheat Hedges for New Crop: please continue to follow our Hedge Advice
instructions for new crop hedging. Old crop marketing is completed.
Wheat: Blend of 13 Technical Indicators: CBOT March SRWW futures close of
3392 finished above last Friday's weekly close of 3344, which in turn
finished above the previous Friday's close of 3196 as well as the Friday
before close of 3074. Futures closed BELOW the first key MA of 340 but
above 334 and 324, a short term neutral indicator. However a close below
the 323 level could turn bulls to bears rather quickly. The blend of 13
short, medium and long term tech indicators suggest a futures buy signal of
40% vs the previous nights 48% buy signal, weakening. March HRWW futures
close of 3870 did close above last Fridays close of 3804 which in turn
closed above the previous Friday's close of 3674 which also finished above
the previous Friday close of 3580. A technically bullish developing trend.
Futures closed above the key Moving Averages of 386.380 and 371. The blend
of 13 short, medium and long term tech indicators suggest a futures buy
signal of 96% vs the previous nights 100% buy level. MGEX March futures
close of 3920 did close above last Friday's close of 3804 which did close
above the previous Friday's close of 3736 which finished above the previous
Fri's close of 3666. Todays 3930 high is a consecutive triple top.
Typically the saying goes, "triple tops are made to be broken". Futures
closed above the key M A's of 380.378 and 377. The blend of 13 short,
medium and long term tech indicators suggest a futures buy signal of 96% vs
the previous nights 100% buy signal. The life of contract high for MGEX
March futures is 3990 made on 10/14/05.

Save by signing up early for Allendale's 16th annual conference. Jan 20 and
21st, Crystal Lake, IL. Speakers include Drew Lerner on weather, David
Hightower on the commodities. Our own staff will present the corn, beans,
wheat, cattle and hogs as well as the very latest on the Asia Alert. Call
800 551 4626 to save.

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.

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