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Bearish report has long tail

01/13/2012 @ 5:51pm

Fundamental Support: Beans fell to finish the week. It seemed we had follow through selling from yesterday’s USDA numbers. Beans have dropped 75 cents in the last 3 days but finished the week only 38 lower. This is the second consecutive lower week and could find support on a further setback. The dollar was strong due to S&P downgrading a few European countries. That was the main reason for the 70 cent rally today. South American weather will still be a concern next week as we get closer to the crucial time for the beans. There are some weather forecasts out there that have increased rain totals for Argentina and that helped the slide today as well. The funds were active again selling another 8,000 contracts. This is the 4th straight day of selling and the 7th day of selling out of the last 8. We are still looking at a further decline as a buying opportunity as we move into the 2nd half of the month. We are showing a chart tonight of crush numbers. NOPA crush will be out on Tuesday. The trade is expectations 141.5 million bushels for the month of December. That would be down 3% from last year. Problem here is USDA’s current 1.625 billion bushel hopes for crush have not been met once. We went from 12% lower in September to 7% lower in October and 5% lower in November. Now we are expecting 3% decline.

Exports and Crush: We hate to beat a dead horse here but USDA’s lowering of crush and export estimates yesterday may not have done the job…Rich Nelson


Trade Recommendation:

(01/13) Buy March Beans 1130, Risk 1095, Objective 1200

Russia’s favored import tariff levels for pork were set at 400,000 metric tonnes. That is down from 472,100 tonnes last year. Lower and lower imports should be expected for Russia in the coming years so this is not a market changing event. For supportive news Paul Georgy, company president and CEO, reminded us that a 50 cent drop in corn prices could encourage producers to slow up their aggressive marketing pace. That could lighten up this heavier than expected supply flow. In addition, perhaps next week’s snows will affect marketings...Rich Nelson


Trade Recommendation:

(01/12) Sell February 83 put 1.10 or better, risk to 1.80, objective 0.

Working Trade:

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