July 28, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 3 lower
When you were a kid did you ever play on a teeter totter? I remember sitting on those darn things going up a little then back down a little. I guess it was a way to kill some time as a kid and there may have even been a certain amount of fun involved but as play ground thrill go it was nothing really exciting. Certainly not as thrilling as hopping on the swing set and trying to swing up and over the top of the swing set. Anyway, that is kind of what this market is, a teeter totter market, a little up and a little down, nothing real exciting, just kind of in a range. If I remember teeter totters correctly the only time I hated them was if I was at the top and the guy on the other end jumped off and let me fall to a hard landing, and of course that hard landing is always a danger in the markets as well. Yesterday afternoon I saw the results of a survey that was conducted of private analysts across the fruited plains and their average guess for this falls national average yield is 155.6 bu/acre. If that is accurate it would projected a 2011/12 carry-out in the range of 600 million bushels and if price models are to be believed that would keep the futures prices in this general area. The only fresh demand numbers that I saw yesterday were the weekly ethanol numbers and they also kept the theme of sideways/teeter totter markets going as they were virtually unchanged from the
pre-ceding week. This morning the weekly export numbers came out at 331,000 versus 432,000 last year so that may apply a little negative pressure at the open. From a technical standpoint, all three of my indicators are bullish but in spite of that I continue to see this as a choppy blah kind of market at the present time. For now the December futures look as if they are defined by the trend lines that we pointed out in this space yesterday.
SOYBEANS: 3 lower
I was visiting with a producer yesterday when he made the comment, “Boy, you really nailed this market in those meetings you had last winter.” I appreciated the compliment but it also got me thinking about beans since I have been more bullish them than anything else as we have gone along. In fact I guess you could say:
I left my heart in the bean pit
From LaSalle Street it calls for me.
To be where traders shout
Climb halfway to the stars!
Chicago’s winds may chill the air
I don’t care!
My love waits there in the bean pit
To celebrate the kickoff of our new web site I will buy lunch for the first producer who can “name that tune” by logging on to my morning comments at www.wheatgrowers.com , once there click on the blog tab at the top of the page and then click on the tab for today’s pre-opening comments, finally at the bottom of the opening comments is a place where you can post a comment. In that area put in the name of the song I just ripped off up above. The first producer to do so will get lunch and a Wheat Growers cap.
Of course all of my bullishness didn’t keep soybeans from trading lower yesterday. As we have discussed in the past, August weather is crucial for this crop and the 6-14 day forecasts coming out of the National Weather Service were showing warm and wet conditions and thus beans were on their heels yesterday. In spite of the forecast there are some analysts out there who are talking about the possibility that this crop could end up being in the 42 bu/acre area which would project 2011/12 carry-out to a number that is under 100 and that ladies and gentlemen would give this market another spark. Finally, we should not ignore the impact of the dollar on any of these markets. The following chart is a monthly chart that shows the dollar in the red line and the spot bean futures in the black line. As you can see, as the dollar falls the price of beans tends to go up and vice versa. If you are in the camp that believes our dollar is still in trouble that should tend to be supportive to commodity prices. Technically, two of my three indicators are now bearish although I believe that we are still trading in the context of a fairly large trading range as we showed with a chart on Monday.
WHEAT: 6 higher
News coming out of the spring crop tour seems to point to a smaller crop and that helped firm up the wheat market yesterday. It is interesting to note that while we closed higher yesterday the wheat market in Paris closed lower as it appears as if the crop in Europe may be a little larger than what was expected. It is also interesting to watch extremely hot weather move into portions of Russia’s spring wheat growing area. One can’t help but wonder if the potential deterioration of their spring wheat crop will cause them to stop the fire sale they have been having into the export market. Technically, all three of my indicators are bullish for both HRW and HRS.