August 22, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 9 higher
Over the week-end I read reports and estimates that the corn crop in Illinois may in fact be close to a state average of 158 bu/acre. The reason that ought to matter to you is that the USDA currently has Illinois factored in to produce a crop with a state wide average of 170. If in fact the crop is much lower than what the USDA is currently estimating that would give more credence to the 149 bu/acre national average yield that was bandied about last week. Last Thursday in this space we ran through the numbers that we will be looking at if we have a 149 bu/acre national average yield and none of the other USDA projections change. If you will recall we ended up with a 356 million bushel carry-out. Folks, we are enjoying some good prices right now but at this level we do not have a 356 carry-out priced in. That kind of a carry-out would take us to price levels we have never seen before. What makes this extra interesting this year is the fact that as things stand right now South Dakota is the only state where the corn crop is rated better than it was last year in the crop conditions report. I was in a few fields this week-end and they reminded me of an excellent crop that I helped harvest a few years back. When it comes to that harvest:
Well, I remember every little thing as if it happened only yesterday
Combining the back 40 and there was not another soul in sight.
And I never had a crop looking any better than that did
And all the farmers in the county were wishing they were me that night.
Though it’s cold and lonely in the deep dark night
I can see paradise by the combine light
Yes, I will send a SDWG cap to the first person that can tell me the name of the song that I ripped off for that gem.
Anyway, the fact remains that this is a very nervous market that hung in real well last week in the face of some fairly scary and grim outside markets. We have the Pro Farmer tour this week which should kick out some fresh news and give us more insight into the yield potential out there but I suspect that the smart money would bet on that news being supportive. We may have some days in which the outside markets beat us up some but for now all three of my technical indicators remain bullish and if this market ever takes off again our old buddy Fibonacci is giving us a target in the December corn futures up around $7.80.
SOYBEANS: 14 higher
I don’t think anything different is happening in beans other than what we have been talking about for weeks. I feel like a parrot. I mean how many ways can I creatively tell you stuff you already know and hope you keep reading my daily drivel? We all know that August weather is crucial to beans. We know that China takes 25% of all the beans we grow so they are kind of important to us and we know that South America grows the heck out of beans so we need to pay attention to them. Having said that nothing new is going on with any of those fronts right now hence, I don’t have much to write about. The one thing that I do have, however, is my beautiful chart to cling to. I am sitting here looking at it again this morning and reminiscing about all the other charts I’ve loved before. (Yeah, that reference is in play for a cap as well) This one should be a no brainer. We are working higher on the November futures and if we get to the $13.90 to $14.10 level and you don’t have any sales on yet and don’t take advantage of that level if it presents itself once again I am going to send my slow cousin Jimmy out to your place to question your intelligence and believe me, none of us want that to happen. Seriously gaze long and hard at the following chart and then please give me a solid reason why selling up at that level would be a bad idea. If you can’t come up with a good reason why it would be a bad idea then I would urge you to get hold of your SDWG grain originator and get a price target in place so that you get a sale off if we get back to the top side of this trading range.
WHEAT: HRS 15 higher HRW 8 higher
Reports of disappointing HRS yields coupled with fears that the acres will actually be lower than expected were supportive to HRS futures on Friday and I don’t think that picture has changed today. Ongoing concern over the drought in HRW country is still very much a supporting factor in this market as well. Overseas the only fresh news that I found this week-end was an estimate of the crop in Australia which pegged it at 22 MMT, down from the 25 MMT that the USDA has been projecting. My technicals are all bullish as we head for the opening bell today and so am I.
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.