October 26, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 1 higher
Enough is enough. I am sick and tired of seeing the night session trade nicely higher only to see the day session throw it all away. It seems to me that we need some fresh news to jump start this market and I have come up with an idea that should revolutionize the corn industry. Here is the plan, we know that China has about 1.2 billion people in the country and they seem to be interested in becoming more westernized. What could be more western than a county fair? What is a county fair without corn dogs? Instead of trade ambassadors we need to send a bunch of fair board members over on a cultural exchange, get all the Chinese excited about starting fairs all across the country. Next, since it is still a communist nation we get the government to issue an order that everyone has to attend a fair. As a part of the cultural exchange we get the license to sell corn dogs at the fairs and the folks go wild over this great new American treat. Before you know it everyone in China has eaten a corn dog. Using the numbers that I got from the fine folks at the South Dakota Corn Growers Association, with 1.2 billion folks in China all chomping down on a corn dog we would use up 1,041,667 bushels of corn to obtain the needed amount of corn meal, just like that we take one million bushels out of the carry-out and we move prices higher. With all the other junk going on around the world I suppose we can call this the Corn Dog Spring and get the press on board pushing it as well. Looks like a sure deal to me and makes as much sense as anything else I am seeing in the market right now. While we are waiting for the Corn Dog Spring to push the market to new highs we still need to trade the current news and right now that appears to be a little on the sparse side. What we do have is continued vacillation in the European situation where one day the news seems positive and the next we are back to gloom and doom. The headline in the Financial Times of London yesterday was: Fears euro summit could miss final deal. This had the dollar a little higher for the day and put some pressure on commodities. On the hand the aforementioned Chinese were the source of speculation as CNGOIC said that China will import 5 MMT of corn in 2011/12. The USDA has them factored in for 2 MMT so if true this would be bullish for prices long term. I say just get them hooked on corn dogs. Technically, two of my three technical indicators are in the bullish column. I continue to look for a solid close in the day session above $6.52. If we get that I believe that it opens the door for a move to at least $6.77 and possibly $7.01 basis the December futures. On the downside I would look for very solid support in the $6.20 to $6.25 area.
SOYBEANS: 2 higher
As the European situation seemed to unravel a bit yesterday the enthusiasm for this market ebbed as well and we staggered to a lower close. Right now this market seems to be getting its cues from the dollar. If Europe gets its stuff together we could see the dollar break hard and send beans on an upward trajectory. On the other hand if Europe can’t figure this deal out we should see the dollar continue to strengthen which would be a drag on commodity prices. Technically we continue to chop around with two of my three indicators now bullish the November futures and I still this as a trading range market with solid support in the November futures at $11.52 with resistance at $12.72.
WHEAT: 2 higher
A stronger dollar and better than expected crop conditions had wheat on its heels a bit during yesterday’s session. Our competition in the export markets seems to be doing well right now with good world supplies. The latest news out of the Ukraine indicates that their crop is rated as 71% satisfactory or better. In China we are being told they will be planting a little over 56 million acres of wheat. Finally, the Bureau of Meteorology in Australia is telling folks they could have a wetter than normal harvest season. I know the only folks that are wrong more than market prognosticators are meteorologists so I don’t want to put too much hope in that until it starts raining but I remember a year ago seeing pictures of kangaroos floating around on hay bales so apparently in can rain in that country if it puts its mind to it. All three of my technical indicators are bullish for both Kansas City and Minneapolis markets, although if the Minneapolis wheat futures trade sideways much longer that chart is going to look like a dead guys EKG.
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