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Corn Price Pressure Seen Ahead, Analyst Says

March corn closed higher Friday in an attempt to get back some of the losses from earlier in the week. The weekly close was still down 13 1/4 cents and finished below last week’s lows. This chart pattern is still negative after Friday’s settlement and can see some selling pressure again this week, if we don’t get back above 3.91 on Tuesday.

USDA announced another sale Friday of 101K tonnes of corn to Unknown. We are still seeing demand and could see more buying if prices continue to cheapen up.

We think the bigger picture is that producers are still hanging on to more than half of the corn crop from last year and need to sell on rallies. If we end up seeing prices push to new lows, farmers will shut the bin door once again, until they are happy with making more sales. This could keep futures in a trading range for now until we get some new to push the market in either direction.

Bulls

  • More export sales again Friday announced from USDA.
  • March corn closed above the 100-day moving average and is holding support.
  • Ethanol numbers this week were strong and should keep support under the market for now.

Bears

  • U.S. farmers are hanging onto too much cash in the bin that need to be priced.
  • The charts closed below last week’s lows and could see more pressure from the technicians.
  • Corn closed below the lower end of the range it has been in for a while. If we don’t get a quick push higher next week, we could see the lows taken out.

Cattle Commentary

Posted 01/16/2015

After last week’s licking, the cattle trade will take any sign of stability for one day as a victory. Since two Friday’s ago, February futures have lost 6.15.  Cash cattle traded mostly at $164 and $165 this week, down from the $170 average last week. There was even some talk of $163’s moving Friday. For the week, wholesale beef gained 4.34 for choice and 3.97 for select. This includes the lower quotes on Thursday and Friday.

Last week’s kill ran 546,000 head which was 9% under last year. Due to our higher weights beef production dropped 6%. On the bear side, we have four days in a row in the Plains will temps will run in the 50’s. Moderately lower temps, though still above the 30 year average, will be seen next week. This may offset a good share of last week’s cold snap’s effect on weight gains.

Friday’s batch of numbers from the monthly Consumer Price Index report does have importance for us in the commodity/food sector. Retail prices for fresh beef showed new all-time highs in December. The $6.31 per lb. price was over November’s $6.30. Compared with last year’s December this was 18% over last year! This number is interesting as it would imply there was not a major consumer backlash against beef in December. That runs counter to what you would assume by that sharp decline in cash cattle and wholesale beef from mid-November to mid-December.

Last week, we recommended to stand aside. Though we feel this market is sharply undervalued, the market has said clearly it has other things to trade in the short term.

 

 

 

Rich Nelson
Allendale Inc.
815-578-6161

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