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Next week's market to remain focused on China

Corn: Today was a slow news day for corn and because of that support carried over from continued talk of China making another corn purchase. Most of the day was calm and there was an attempt at midday to run this corn high enough to try and find fund buy stops. December corn took out yesterday's highs at that time showing that the large wall of selling we had been keeping track of was not present today. That leaves question markets as to where the next round will come in.

At first estimation, one would assume that the $4.00 mark will be the next hurdle to get past on a continued move higher. For the beginning of next week the market will key its focus on China. Either we come in with a confirmation of sales which helps December jump up to 400 or it turns out to be a bust setting back most of this week's gains. There is no way to know yet just how that will turn out so we will need to focus on what we do know. There are some dry areas that look to pick up some rain today; planting progress for corn has been fantastic and there are no real threats of poor weather in the forecast. Those are all bearish fundamentals and we need to keep those on mind. Lastly, what we need to look at and probably most importantly is that with a very strong close, there is no doubt the market wants to try for higher. With a high in December corn today of 392 3/4, we will need to keep a very close eye on our hedges. Hedge goals are coming up faster than many would have thought. Without a doubt, the market prefers higher moves, we just need to make sure to lock in some hedges before a possible change in attitude. Corn bulls will look for the next round of selling not to occur until 400. Bears will need that 400 level to hold and have China disperse any rumors about buying additional corn. If you are rained out this weekend while planting, watch corn on Monday, there is a good setup for hedge opportunities.

Direction: Fundamentals are neutral right now. As this China corn story is unraveling look for a test of 400 next week. In the big picture 400 to 425 is reaching over-valued pricing. Where will this market be when it begins trading bigger than trend yields due to early planting?…Ryan Ettner

Working Trades:
· (04/30) Buy July 367, risk 358, objective 382.
Working Trades:
· (03/24) Bought July 380 call/sell July 440 call/sell July 340 put 4 1/2, risk to -4, objective 19. Closed 7 3/4.

***Disclaimer*** The commentary and trades below are derived from technical indicators provided in our Allendale Advanced Charts pages and may not correspond with the fundamental commentary above.

Advanced Charts Direction: Although corn posted an inside bar on its chart today, the close was above previous resistance at 374 3/4 to finish the week. This could propel the market up to next resistance at 387 1/2 next week. There was low volume today however…Monica Moehring

Vital Technical Indicator: the next projected major turn day is May 4.

Live Cattle: There has been three straight quarters of economic growth now. Though the government's 3.2% growth estimate for the first quarter was under the average guess of 3.4%, we won't worry too much about the small difference. The bottom line is the economy has turned. In coming months we may start to see better numbers appear on the employment side. As we noted in the morning comments, US beef demand is best correlated against employment and consumer spending information. It is no where near perfect, but is a good indicator.

While the economy side is good news, it still cannot overcome the normal decline in cattle prices from spring into fall. Take a look at the Special Reports Section of our internet site and view the Beef Production chart. It shows the normal rise in beef production is on-going. Cash cattle peaked a few weeks ago at $101/101.50 and ended this week at $98. Our downside target is $88 to $90 for cash cattle for the summer which implies $90 summer futures…Rich Nelson

Trade Recommendations:
· (04/30) Sell August 97 call/sell 91 put at even, risk -1.50, objective 3.00.

***Disclaimer*** The commentary and trades below are derived from technical indicators provided in our Allendale Advanced Charts pages and may not correspond with the fundamental commentary above.

Advanced Charts Direction: …Monica Moehring
Vital Technical Indicator: Next projected major turn day for live cattle is Monday and for feeders is May 19.

Rich Nelson
Director of Research
Allendale, Inc
4506 Prime Parkway
McHenry, IL 60050
800-262-7538

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or adhere to a particular trading program in spite of trading losses are material points which can adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

Corn: Today was a slow news day for corn and because of that support carried over from continued talk of China making another corn purchase. Most of the day was calm and there was an attempt at midday to run this corn high enough to try and find fund buy stops. December corn took out yesterday's highs at that time showing that the large wall of selling we had been keeping track of was not present today. That leaves question markets as to where the next round will come in.

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