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Losing corn and soybean acres-Rich Nelson

06/05/2011 @ 8:28pm

Beans were higher all session and farmers continue to wonder why. The eastern Corn Belt has a great opportunity to plant over the next few weeks. Those farmers are ready to plant and will plant as fast as they can. As we continue to hear estimates from other firms, it seems the trade believes we may lose acres in beans as well as corn. Our unofficial stance right now is that we don’t feel there will be much change for acreage. We don’t think we will see a big increase in soy acres due to the profitability in corn at this point. We also shouldn’t see a decrease in acres with the weather providing a great opportunity to plant. This was a good week on the charts and funds were buyers. Next Thursday is a USDA supply and demand report. We may see an increase in carryout for new crop as USDA is too optimistic on demand. This could bring a round of profit-taking early next week. The fundamentals are still bearish but the technicals have the trader’s interest for now.

Acreage and Yield

USDA rarely changes acreages on this report anymore. The last time corn acres were lowered on this June report we saw a slight increase on soybean acres. They are also resistant to changing yields when producers are still actively planting. Since 1993 they have only changed yields in 1995 and 1996.

Direction

Today’s close is friendly on the daily, weekly, and monthly charts. Beans had been in a sideways range for more than two months. This breakout had the bulls on the long side this week and may continue to buy next week on technicals alone. We bought beans yesterday on a breakout and looking for a move to 1440 next week. First area of resistance will come in near 1431 then 1440 with support near 1402 ½ and 1398. Beans finished the week 34 3/4 higher…Steve Georgy.

Fundamentals

While some in the trade are looking for lower acreage to support prices on next month’s supply/demand, for now, the picture is a little negative. Look only for demand changes…Rich Nelson

Trade Recommendation(s):

 

  • (05/25) Sell July Beans 1363 1/2 stop, risk 1383, objective 1335.

 

Working Trades:

 

  • (06/02) Bought July Beans 1404 stop, risk 1384, objective 1439 ½, closed 1414 ½.
  • (05/25) Sold July Bean 1440 call 19 7/8 cents, risk to 34 cents if futures are stopped out, objective 2 cents. Closed 22 ½ cents.
  • (05/26) Bought July Bean Meal/sold December Bean Meal at $6 premium July, risk at $2 premium July, objective $20 premium July. Closed $8.

Lean Hogs

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