September 1, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 8 lower
Before I get into the morning comments I have to tell you that I saw the coolest thing a couple days ago. I saw a SDWG patron sell cash corn for over $8.00/bu. This was the first time I have ever seen that happen and I wanted to share how this person was able to do it. Working closely with their SDWG grain originator they entered into a basis fixed contract a while back and then on the rally earlier this week locked in the futures. By locking in the basis when it was better than today and then taking advantage of what the market rally gave us they were able to achieve a selling price of over $8/bu. While I can’t promise $8 corn we do have a group of talented grain originators that would love to work with you, to talk to your local originator please contact your nearest SDWG location. As for the current markets, yesterday saw profit taking as we approached both month end as well as neared the start of a three day week-end. The news was mixed with the Linn Group releasing a total production estimate of 12391 by lowering acres and placing the national average yield at 149.1 bu/acre. A total production number at that level would knock the carry-out down to around 200. On the other hand we had a resurgence of talk about the large supplies of feed wheat in the FSU and the expectation that this will be substituted for corn thus reducing corn demand. From a technical standpoint I would like to point out that I told you the December futures would go to $7.80 and they went to $7.79 so I guess I am really slipping in my ability to read the market. Actually, in all seriousness what that seems to indicate to me is that the technical indicators are working pretty well. In looking at the Fibonacci numbers I see that we have some support at $7.31 with more major support at $7.01. Two of my three technical indicators are still bullish but don’t be surprised if we drop down and test support after this last run up.
SOYBEANS: 11 lower
The Linn Group threw out a soybean production number of 2997 which would give us a carry-out of under 100 if the reset of the USDA assumptions were left unchanged. We may very well see some profit taking as we head into the long week-end but with the expectation that the Tuesday crop conditions report will show the crop slipping some more the potential sell-off should be muted. As far as the technical indicators go, I have been telling you that November beans would go to $14.60 and as you can see on the following chart I pretty much nailed that dead on as well. (With the way the indicators have worked for both corn and beans I slipped in an old cassette tape of Mac Davis singing “Oh Lord it’s hard to be humble when you’re perfect in every way” as background music as I pen these comments this morning.”) Two thirds of my technical indicators are bullish and for now that $14.60 level looks like it will offer stiff resistance.
WHEAT: 11 lower
The only fresh news that I can come up with here is increased talk that, with the HRW insurance number currently at $8.65 we will see increased HRW planting as farmer’s plant for “insurance protection.” Time will tell if that is true or not and concerns over the drought are still at the front of most traders minds. As has been the case with corn and soybeans the resistance numbers have proven to be a significant barrier for now. Longer term I have to be somewhat friendly unless it starts raining. For now two of my three indicators are bullish.
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.