August 29, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 7 higher
I have found myself wondering this week-end if I am myopic in my thinking. I hope not, but having said that I can’t imagine that we will do anything other than trade the Pro Farmer projected national average yield numbers. The numbers were released after the market closed on Friday and the projection for corn is 147.8 bu/acre. The following chart is using that yield and leaving the rest of the USDA projections unchanged.
I know we touched on this last Friday but the July 2011 corn futures had a life of contract high at $7.99 ¾. We achieved that price as we were looking at an estimated carry-out of 675. With the Pro Farmer numbers we could project a 263 million bushel carry-out and clearly need to run prices high enough to ration demand. If a projected 675 carry-out took the July 2011 futures to $7.99 ¾ how high could a projected 263 carry-out potentially take the July 2012 corn futures?” I suspect that this is a question we will spend the next few months answering. For those of you that will have new crop corn that you need to sell at harvest time I have been saying for some time now that the resistance level in the December futures is in the $7.80 level. You may want to lay in a price target at that area. If you don’ want to do that keep an eye on how it acts if/when we get to that level and if the price struggles at that area get some sold. For now, my indicators are bullish and so am I.
SOYBEANS: 13 higher
With a weather forecast that features warm and dry weather for the rest of the month the traders were clearly in a nervous mood and showed it by aggressively buying soybean futures. After the close the Pro Farmer report actually showed a larger projected yield (41.8 bu/acre) than the last USDA report (41.4 bu/acre). With the trade expecting this afternoon’s crop condition report to show another decrease in the crop condition I would look for the market to work higher today as well. Technically, the November futures finally broke through the sideways trading range that we have been in since December and posted a new life of contract high. The next Fibonacci resistance level in the November futures now becomes $14.60. All of my technical indicators are bullish at the present time.
WHEAT: 2 higher
Fears over a continuing drought and the impact that could have on planted acres of HRW coupled with a general overall grain rally helped propel this market higher on Friday. The drought map that I ran in this space last week shows a drought that is deepening and spreading up into Kansas as well as across portions of the Corn Belt. This should continue to support wheat. What will be interesting to watch is how wheat acts now that we have made a full 61.8% retracement of the last down move. If this is truly going to be a bull market we will need to blow past this resistance level. All of my indicators are bullish but keep a very close eye on how the market acts at this level. The ability or inability to get through this price point is very important from a technical perspective.
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.