I had to be on the road prior to the closing on the overnight session but look or the markets to open in line with the overnights close.
August 3, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: use the overnight sessions close
You could smell the fear in the market yesterday. I have always wondered what fear smells like and for some odd reason yesterday it smelled like bacon but I digress. The market was flat out scared that the hot temperatures have damaged this crop and as evidence offered up pictures of great looking corn fields and then pictures of representative ears picked from those fields. If you would like to see pictures of a corn field in Iowa and the representative ears pulled from that field drop me an email and I will send them to you. Throughout the session I heard talk that we may be looking at a national average yield of 150 bu/acre. Some models indicated that we could cut from 10 to 20 bu/acre from trend line yields in the stressed areas. (I should clarify that these models were computer models designed to project yield and not fashion models walking around in swim suits while discussing corn yields.) In looking at the feed grain picture from a little broader perspective it should also be noted that the milo crop is currently rated at 24% good to excellent which would seem to indicate that this crop could be as much as 70 million bushels less than the latest USDA projections. After the close we had a violent reaction in the outside markets with the DOW down sharply as Moody’s Investor Services placed the USA on the “negative outlook” list which seems to signal the loss of the AAA rating at some point in the future. Golly, I sure am glad we have those smart folks in Washington watching out for us. On the other hand Scott Minerd, CIO of the Guggenheim Partners was quoted yesterday as saying: Europe is a "train wreck" and on the "brink of a major financial crisis." He added that, “The United States is "the least dirty shirt in the bag," so I guess we should feel pretty good about ourselves. Anyway, the negative outside markets weighed on commodities at times during the night session and it will be interesting to see if we get back to trading weather fears today or stay fixated on the outside market influences. From a technical perspective it is interesting to note that we may have the opportunity to set a new life of contract high in August. That is fairly rare and when it does occur usually brings a great deal of volatility with it so fasten your seat belts. All three of my technical indicators are bullish with resistance in the December futures at $7.22 ¾ and $7.78.
SOYBEANS: use the overnight sessions close
$14.54. That is what the Fibonacci number is when applied to the weekly chart. As we sit here this morning there are some very legitimate concerns over the impact the weather is having on this crop. We are coming into this deal already projecting a very tight carry-out and if we start dropping bushels of production it gets real serious real fast. It is not just the USA that has a tight carry-out as the Western Hemisphere is also projected to be at near record tightness. So, this is our playing field; a market that is projected to be tight and a crop that may be losing yield potential as we speak. Toss in nervous investors and this baby could be fun. It will obviously be important to take out the $14.11 level in the November futures and if that is accomplished look for the market to move to at least $14.54. I have been waiting for this market to break one way or the other out of its trading range and now it appears as if we may be on the cusp of that breakout and if so it will be a breakout to the upside.
WHEAT: use the overnight sessions close
Wheat rallied on corn’s coat-tails yesterday. Of course if you have wheat you probably don’t give a flying flip why it rallied, you are just grateful that it did. From a technical perspective we are at the time of year when we often put in the lows so that is encouraging as well. If the corn rally continues look for wheat to be pulled higher as well. Technically, all three of my indicators are bullish and as you can see on the following Minneapolis December wheat futures chart, the Fibonacci numbers indicate that we could test the $9.50 level.
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.