Too early to call corn low
For The Week: for the week of October 27, December corn futures value increased 7.7%, November soybean futures value increased 7.2% and December CBOT SRWW value increased 1 percent.
For The Month: for the month of October, December corn futures value down 18%, November soybean futures value down 11% and December CBOT SRWW value down 21%.
Corn Commentary: corn endured its second consecutive lower day on Friday at the hands of a weaker crude oil futures market, and stronger US dollar. Harvest progress expected to be positive at least through much of the weekend and first two days of next week, is expected to find delayed as we approach the middle of next week.
A bright spot to begin the day on Friday was S Korea's purchase of 55 K tonnes of US corn.
With USDA using a target of 1.95 billion bushels for 2008/09 market year, cumulative sales as percent of the target are 34% which is identical to the five year ave.
Argentina corn planting is working with near ideal conditions and has its sight set on 19 million tonnes of corn production vs 20.5 MT in 2007.
South Africa continues to struggle with dry weather for its corn planting and has an initial target of 11.5 MT vs 12.5 MT in 2007.
Until this years corn harvest is at a minimum of 60% complete, Allendale can not call for a potential harvest low. Basis levels remain strong.
Allendale's research suggest those who are beginning to feed poultry and pork are likely to have positive profit margins but the cattle continue to remain in the red. Broiler egg set is trending higher on a weekly basis from its recent low on Oct 4th. Look for broilers chicks placed to have set its low Oct 29th and now potentially working higher. As a reminder, poultry consume 50% of all the annual soymeal production in the US.
Bearish to corn is the rumor, Mexico may be interested in importing Black Sea origin feedwheat vs US corn.
On the day it is estimated funds sold 5500 contracts of corn.
Corn Technical Commentary: 4276 is immediate resistance, additional resistance is 4480 chart gap to 4530. Key short term support of 3950 held.
Vital Technical Indicator: the next projected major turn day is forecasted for November 11.
Trade Idea(s): Stand Aside.
Option Strategy(s): Bought 1 370 call @ 31 . Risk to 17. Obj 60.
Special: Ethanol; The Energy Information Administration has released its most recent ethanol production and end stocks data (for the month of August). Thursday's report is the final for the 2007/08 marketing year. The EIA has released its month of August ethanol production estimate at a record 20.1 million barrels vs July's production of 19 mb. The 20.1 million barrels of August 2008 production represents an increase of 49% vs August of 2007. With record production of ethanol in the month of August, total corn used for the 2007/08 fell short 16 million bushels from a target of 3 billion bushel and may likely have the 16 million added to carry in stocks for the 2008/09 marketing year.