December 19, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 12 higher
I had a chance to catch up on some reading over the week-end and came across an opportunity that some of you may want to take advantage of. There is a company, UFO Abduction Insurance Co. that sells a policy that pays out $10,000,000 if you are abducted by aliens. The cost? A mere $19.95. Now, I know that the odds of getting a pay off on this are pretty darn slim but I would also point out that never in the history of the world has anyone come out ahead when they were offered $6 cash corn out of the field at harvest time and chose to store it instead so if you were willing to take that chance maybe buying Alien Abduction Insurance makes a certain amount of sense. Well, enough of that, since I still have some corn to sell myself I suppose I should look into getting a policy.
Looking at the fundamental news the biggest driver on Friday was recurring fears of drought in South America. A story was making the rounds that some corn in Brazil is already being replanted to soybeans. I don’t know how much truth there is to that but of course in the markets the truth doesn’t matter since perception tends to drive things. Anyway, we will want to continue to be as tuned into the South American moisture situation as we can. The other interesting thing that happened on Friday was the release of the Informa 2012 projected plantings report. The following chart uses the Informa planted acres number and then a series of assumptions after that. The end result would be a carry-out for 2012/13 of nearly 1.5 billion bushels. If that were to happen we may very well be selling cash corn for a number that begins with a 3. The story this morning seems to be that China has admitted that they are stockpiling grain which is being seen as positive. So, the positive outweighs the negative this morning and we should open higher.
Technically, two of my three are bearish with support on the monthly chart coming in at $5.46 for the nearby futures.
SOYBEANS: 17 higher
Forecast for hot and dry weather drove the bean market higher on Friday and probably will take us higher today as well. Aiding in the push to the upside was the Informa planted acres report which came out at 74.6 million acres, down from the 76 that they projected in their last report. This was enough to turn all of my technical indicators bullish for the time being. My biggest concern right now is the fact that the South American supplies are 7 MMT larger than a year ago and they are hurting us in the export market. Having said that, if the trade is going to move into a weather market kind of mode I am not about to step in front of it. Let’s let this baby run and see what they can do with it. From a technical perspective, in the January futures the first logical resistance point is at $11.68.
WHEAT: 7 higher
Prices seem to be stabilizing in the Black Sea region which ultimately could be positive for us. In weather news it looks as if the parched portions of our HRW country as well as dry areas of the FSU and Europe have gotten or will get beneficial rains. The Informa planted acres report on Friday p[egged all acres of wheat at 57 million, up from 54.4 million this past year. If true, that will keep a cap on wheat prices for the foreseeable future. Today I look for them to follow the rest of the market higher.
Technically I don’t have anything new to tell you with all three of my indicators still bearish both the Minneapolis and Kansas City futures.
The information contained above was taken from sources which Wheat Growers believe to be reliable, but is not guaranteed by Wheat Growers as to accuracy or completeness and is made available for information purposes only. There is a risk of loss when trading commodity futures and options.