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Bean weather eyed -Rich Nelson

08/19/2011 @ 3:11pm

Beans found strength to finish out the week. Weather is still the main concern and will be the focus as we move into next week. No major fundamental news was released today.   Outside market influence helped beans stay above 1350 for the 3rd day in a row. The November contract was up about 30 cents for the week as investors feel bean yield might be in danger from the lack of rain through the midsection of the Corn Belt. We are starting the annual Allendale Yield Survey on Monday and ask all of you to participate. We have done very well in the past on the survey because of you. This will give us a great opportunity to see what is going on all over the country. There will be crop tours starting next week. The trade will be watching these numbers very closely. We are still holding on to our puts but will look at rolling them up if we break above 1400 next week. Sunday’s trade will be all about what crude and the stock market are doing so keep an eye on them. Bean Yield Question: Currently, much of the trade is discussing a lower yield in corn next month. Soybean yields will be a harder “windshield” guess. Right now Allendale is leaning towards a slight increase as weather has been beneficial. Our annual crop survey will provide more light on the subject…Rich Nelson

 

Working Trade:

·       (8/16) Bought October 1350 put at 25 cents, risk to 0, objective 45 cents. Closed 20.

Though the cattle market has done a fantastic job in ignoring the economy jitters of late, we do have to wonder if US consumer demand will show a smaller growth. This chart shows demand, for cash cattle, has had five quarters of growth off the recession. Allendale will likely lower its assumptions of second half 2011 growth. We continue to believe 2012 will easily show growth. Financial economics are calling for GDP growth of 4% in 2012.

 

Rich Nelson

Director of Research

Allendale Inc.

4506 Prime Parkway

McHenry, IL 60050

815-578-6161

 

Hypothetical performance results have many inherent limitations, some of which are described below.  No representation is being made that any account will achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.  One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight.  In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading.  For example, the ability to withstand losses or adhere to a particular trading program in spite of trading losses are material points which can adversely affect actual trading results.  There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

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