January 9, 2012
By: Craig Haugaard, Grain Origination Manager
I would like to remind you that Wheat Grower annual meeting is this week. Tomorrow, January 10 we will be at the Dakota Event Center in Aberdeen and then on Wednesday, January 11 we will be meeting at the Crossroads in Huron. Registration starts at 8:15 with the first speaker at 9:20 both days. I will be speaking at 11:00. Last night I dreamt that I had to speak to an empty room so I am hoping some of you will have pity on me and at least come out for my talk. Hope to see you there.
CORN: 8 higher
We are living and dying with South American weather reports these days. On Friday the models were showing good chances of rain beginning today. Those models have changed to include less rain and this morning we are looking at a forecast that is showing rain in Argentina for Tuesday and Wednesday with one to two inches possible. The model also shows the rain moving into Brazil later in the week. If this were to be a major shift in the weather pattern it would probably be viewed as bearish but with the models all showing a return to 100 degree days and no rain after this one moves through the bulls are clearly in charge of this market today. Until the weather pattern changes or we burn this crop up to the point where we can’t do any more damage the path of least resistance will be to the upside. The one fly in the ointment today may be that today is the start of the fund re-balancing so we in all likelihood will see some fund selling which may offset some of the bullishness that I expect to see in the corn pit today. My technical indicators are all bullish. I would expect the next level of resistance in the March futures to come in around the $6.77 area while in December 2012 futures look for it at $5.87.
SOYBEANS: 10 higher
The same pattern obviously impact the bean crop as well and it goes without saying that the impact is also bullish. In looking at other news I see that palm oil production in Indonesia is expected to be up 14% this year over last year. In looking at old crop bean demand I am having some analysts tell me that the slow export demand that we are seeing will eventually be reflected in the USDA numbers as a decrease in exports and an increase in carry-out. I don’t think that matters right now but l don’t want you to get blindly bullish and not get some sales off at good levels only to get bush-wacked by this kind of news later on. Technically, all of my indicators still bullish with the next resistance level in the March futures coming in at $12.20.
WHEAT: HRS 8 lower HRW 8 higher
With the fund re-balancing set to start today the conventional wisdom is that funds will be buying wheat contracts. We have wheat harvest starting to wrap up in Argentina where 91% of the crop has been harvested. Looks like they will harvest roughly 14 MMT. Egypt was in for wheat and once again ended up buying it from the Black Sea region. The January 12 report will give us the winter wheat seed acres and right now the average trade guess is that it will come in at 40.9 million acres, up just slightly from the 40.6 million planted last year. Not much else to report. Cumulative export sales are running 25% behind last year but the USDA is projecting that we will be down 28% so I guess we are doing a little better than expected thus far. At the end of the day we have plenty of wheat both domestically and in the world right now and it seems to be viewed almost as a feed grain these days. As long as that is the case look for it to takes its price direction lead from corn. Right now corn is bullish so wheat should get pulled along today as well. Technically, all three of my indicators are bearish Minneapolis wheat while two of the three are bearish Kansas City.
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