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September 2012 Archive for Standard Grain

RSS By: Joe Vaclavik

Joseph Vaclavik is the president at Standard Grain in Chicago. Standard Grain provides futures and options brokerage to farms, feedlots, elevators, processors, end-users and traders. Visit www.standardgrain.com for more information.

 

December ’12 Corn: Support Levels

Sep 18, 2012

 

The December corn contract bottomed out at $4.99/bushel on May 11, 2012.  At this point in time, the trade knew that corn acreage in the US would be enormous while weather conditions were looking near ideal for planting. 
 
Enter "Drought 2012."  The market rallied from these lows, trading as high as $8.49/bushel on Aug. 10.  The perceived shortfall in production that the drought would cause was enough to push the market to new all-time highs.
 
Now, the market sits at a crossroads.  As fund traders liquidate and seasonal weakness sets in, the market is now $1 removed from the recent highs.  How low can it go, and what are some likely downside targets?  Using a simple Fibonacci Retracement and some major moving averages, we have identified a few areas of possible support. 
 
powerhrcornchart 
Support Levels
 
1)      $7.16 (38% retracement of rally)
2)      $6.74 (50% retracement of rally)
3)      $6.72 (100 day moving average)
4)      $6.32 (62% retracement of rally)
5)      $6.16 (200 day moving average)

 

USDA Report Preview

Sep 11, 2012

The USDA will release their September Crop Production report on Wednesday morning at 7:30am CST. The report will provide new supply, demand and production estimates for corn, soybeans, wheat and other crops.

The grain markets have sold off ahead of the report. December corn now sits below $7.80, the lowest levels seen since July. November soybeans traded below the $17 mark on Tuesday, but were able to rebound to close at $17.01 ½. The numbers below indicate the trade’s "average guesses" for tomorrow’s report and will assist traders/producers in dissecting the government’s numbers.

 

 

12/13 Production Sept USDA Avg Guess Range Aug USDA
         
Corn Production   10.38 9.860 - 10.780 10.779
         
Corn Yield   120.6 117.6 - 124.0 123.4
         
Soybean Production   2.657 2.510 - 2.739 2.692
         
Soybean Yield   35.8 34.5 - 36.7 36.1
         
         
         
         
11/12 Ending Stocks Sept USDA Avg Guess Range Aug USDA
         
Corn   1.044 .971 - 1.176 1.021
         
Soybeans   0.134 .125 - .145 0.145
         
         
         
12/13 Ending Stocks Sept USDA Avg Guess Range Aug USDA
         
Corn   0.592 .458 - .658 0.650
         
Soybean   0.109 .087 - .128 0.115
         
Wheat   0.704 .670 - .765 0.698

 

Wednesday Morning Grain Update

Sep 05, 2012

www.standardgrain.com | info@standardgrain.com | (312) 462 - 4438

 

    The grain markets are marginally lower across the board this morning.  Yesterday, the complex rallied early in the day but sold off to finish towards the lower end of the day’s range.  November soybeans took the brunt of the selling, topping out at $17.89 before closing at $17.68 ¼.  Corn and wheat have proven to be "sell rally" markets during the past several sessions.  The December wheat contract has been unable to hold a rally above $9.00 despite some bullish news out of Russia and Australia.  Spread action was the key feature of yesterday’s trade.  The Nov12 – Nov13 soybean spread finished the daily sharply lower and nearly 35 cents removed from the day’s highs.  Most corn spreads finished lower and well removed from their highs as well.  Fresh news is lacking this week. 

Corn ratings were mostly unchanged on yesterday’s Crop Progress report from the USDA.  The crop is rated 22% good-excellent and 52% poor-very poor, both unchanged from last week.  Corn harvest is 10% complete vs. 3% on average.  Soybeans are rated 30% good-excellent, unchanged from last week.  The bean crop is rated 37% poor-very poor vs. 38% last week.  Spring wheat harvest is now 95% complete vs. 89% last week. Heavy rains from Hurricane Isaac may have slowed harvest progress in some areas; however the rains were soaked up very quickly in most areas.   

Another round of private production estimates will begin this week.  FC Stone will release estimates for corn and soybean production today; Informa will release their numbers on Friday.  Yesterday, well respected agronomist Cordonnier estimated the US corn crop at 9.8bil/bu.  Dr. Cordonnier estimated the soybean crop at 2.52bil/bu.      

      Outside markets are mostly mixed this morning.  Crude oil is 30 cents lower, now trading near $95.  The US$ is higher with equities lower.  The macro trade is awaiting the European Central Bank’s Thursday meeting in which Draghi may announce another spree of bond buying.  Bernanke’s speech at Jackson Hole on Friday was seen as slightly positive for stock market.  Unemployment will be released Friday morning.  Nonfarm payrolls are expected to rise 125,000; unemployment expected to remain steady at 8.3%. 

      We look for a choppy trade today with no directional bias.  Although the markets feel as if a correction may be in order for corn and wheat, soybeans continue to grind their path higher.  The beans have emerged as the true bull market within the complex.  Harvest results continue to pour in, and are variable at best.  We’re finally starting to hear some good yields from places in Central IL and Southern MN.  Next Wednesday’s Crop Production report from the USDA will be the next potential market-moving event.      

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