Domestic useage key to corn futures prices
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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.