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Longterm bullishness for corn

Agriculture.com Staff 08/11/2008 @ 1:33pm

Historical Price Trends: best odds for the week of August 11, according to our HPT page is for CBOT October Live Cattle suggesting 80% odds of higher trade by the end of next week, vs where futures closed on Friday Aug 8. The average gain has been 76 points.

For The Week: for the week of August 4th, September corn futures value decreased 12%, September soybean futures value decreased 13% and Sept CBOT SRWW value decreased by 4%.

Technicals: 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.

Corn: Allendale has released its production and stocks estimates, added the trade's average and range of estimates and are found on our Midsession Comments page. Bearish to corn is free falling Energy and Ag soft commodity futures as well as grain futures and the strengthening of the US dollar. Also bearish to corn futures is the perception of increasing crop conditions which is expected to translate into greater production. Bullish to corn is the falling cash prices beginning to translate into increased profit margins to again walk corn off the farm vs trucked off the farm. Also bullish to corn is stronger than usual export demand. Allendale suggest the bearish slant to continue into USDA report day on August 12th and then the potential for futures to consolidate and focus on the potential for even with an average frost/freeze of damage to corn for grain. Given the fact the EPA denied the TX Gov's request to cut the US ethanol mandate in half and several weeks ago the USDA refused to allow the early release of CRP acres without penalty, suggest 2008/09 end stocks to remain relatively tight in nature. Friday's commitment of traders report suggest funds lightened its combined futures and options weekly position by 27,158 contracts. However commercials added 34,298 contracts which is viewed as support to corn futures.

Trade Posture: Fundamentally, Allendale remains long term bullish to corn on tight stocks to use for specifically corn and total world grain stocks to use. Technically Allendale is bearish to futures and suggest futures rallies to be sold and probe a potential bottom with long calls. View our latest trade recommendations within our Grain Trading Strategies page

Wheat: Demand for US wheat, remains impressive vs year earlier levels both for export sales and inspections. Re newed concern is building regarding less than beneficial weather for spring wheat. Saskatchewan, Canada's wheat crop continues to lag normal maturity by two weeks and could be vulnerable to a frost/freeze. The pressure on wheat futures is mainly from spill over pressure from the neighboring corn and soybean pits.

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