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A 2012 net acreage increase

10/28/2011 @ 3:22pm

Profit-taking pushed beans lower Friday, after a big rally yesterday. The dollar found some strength and had investors taking some positions off, ahead of the weekend and the end of the month. 

With light volume, spreaders were in control with corn finishing higher and beans lower. Funds sold 7,000 contracts of beans and bought 7,000 contracts of corn. 

News is limited but continue to watch the dollar for direction Sunday night. The news out of Europe this week was friendly for commodities as investors increased their appetite for risk. We feel beans will stay supported on breaks and should stay in the sideways range we have been in for the last few weeks. 

We took profits this morning and will look at buying a break Sunday night. We have a chart showing a breakdown for next year’s acreage ideas. Total acreage of corn, soybeans, wheat, and the other 25, has fallen by 8.6 million in the past three years due to problematic spring plantings. 

Available for 2012, we have these missing acres + another 1 to 2 million from the lesser 25. There is room for a net acreage increase between the top three for 2012. Early thoughts are a 700,000 acre increase for corn, beans could increase by 1 to 2 million, and wheat could see a 2 million acre increase.

Soybean Acreage: Acres for the top three crops will easily increase next year. The only question is the allocation. Profit projections for 2012 planting still favor corn over beans. However, producers are reporting some fatigue with multiple years of corn on corn. We see a 1 to 2 million increase for soybeans as producers are clearly wanting something easier to handle and the profit, though less than corn, is still right.


Working Trade:

·         (10/21) Buy January beans 1220, risk 1195, objective 1250, closed 1226

·         (10/21) Bought January beans 1225, objective 1248 ∏ filled 10/28 for +$1,175.

·         (10/6) Bought December 310 meal call/sold December 340 meal call at 8.00, risk 0, objective 30.0. Closed 9.45.

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