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Strong bean price + slow planting=$4 corn

Agriculture.com Staff 04/16/2010 @ 4:46pm

"We are done planting." That is what we are starting to hear from areas in south central IL and IN. With another week of dry weather forecasted those who are just starting or have been going for just a few days will get a chance for at least getting a good amount in the ground. In all, there are still very few complaints with how the spring is going.

This market found a good amount of support from the beans yesterday and it can be seen today. With the beans trading around even for most of the day, corn stepped back a couple cents. As long as corn does follow the bean market as much as it has you should keep a close eye on our bean commentary for signs of a turnaround. This market would likely break back down to our old sideways trend if beans loose some of the recently gained premium. There are some people we are talking with that are starting to be concerned with the possibility of turning too dry going into summer. Right now the extended forecast does call for going back to more average temperatures and precipitation. In fact the forecasters have suggested that the rain moving in next week will do well in restoring moisture that will be lost this week. Right now if we are to find support next week, it will not be coming from weather. It is still too early to talk about being too dry. We will also need to watch the planting progress report next week. Any number for planting progress will look bearish when compared to the 5 year average. On this morning's Grain Fundamentals 1 page we noted how the five year average will be 9% on Monday. The trade is talking of a 15%-25% number nationwide for this year. For next week, we need to see rain in the forecast, beans need to stay strong and somehow come away with a low planting pace number in order to get enough momentum to break 400. While this may be tough to accomplish we have also not seen aggressive selling so there is some support under this market as well. Some of that support is likely coming from the rising ethanol price as seen yesterday. Even given recent gains, this market is still range bound and it will take some big news or spec trading to break out of this range next week.

Direction: Next strong resistance is still seen at 400 the December. After checking with the floor once again, it was mentioned that 400 to 410 would see some aggressive selling. Planting pace will weigh on corn while ethanol and help from beans will add support to keep this market sideways…Ryan Ettner

Trade Recommendations:

· (04/16) Buy July 359, risk 349, objective 375.

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 6 7/8.

· (04/05) Sold May 357, risk 365 filled 04/16 for -$400.

***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.

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