January 10, 2012
By: Craig Haugaard, Grain Origination Manager
I would like to remind you that Wheat Grower annual meeting is this week. Today 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.
After the current system moves through South America there is nothing in the forecast for Argentina with some rain in the 11 – 15 day forecast for Brazil. If history is any guide the accuracy of the 11 – 15 day forecast is about as accurate as blind basketball player at mid-court. That seemed to be the opinion of the trade as well as the market continued to rally strongly yesterday. Conab was out this morning estimating the size of the Brazilian corn crop at 59.2 MMT, down from the 61 MMT the USDA has been using. The other piece of news that will be getting attention is the USDA report that is coming out on January 12. The average trade guess is for a slight reduction in the national average yield and an increase in usage with the net result being an average trade guess for the carry-out of 749 million bushels, down from the 848 projected in the December report. 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. Obviously we traded through that area in the December futures yesterday but were unable to close above it. A close above it would open the way for a move to the next resistance level of $6.19.
SOYBEANS: 1 lower
The ongoing drought in South America caused the soybean futures to explode to the upside yesterday. Without any significant rain in sight the path of least resistance continues to be higher. The Conab report this morning took the estimated size of the Brazilian crop to 71.7 MMT, down from the current USDA estimate of 75 MMT. Technically, all of my indicators are still bullish. With the $12.20 resistance level in the March futures being taken out yesterday the door is now open for a move to the $12.90 area.
WHEAT: 2 lower
Wheat hitched a ride yesterday to a solid close for the session. The move was enough to turn two of my three Kansas City technical indicators bullish while the Minneapolis futures still lag with all three of those indicators still bearish. As long as the row crops are bullish wheat should continue to work higher as well.
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.