3 Reasons to Be Concerned About a Top in Corn
Aug 28, 2012
Good Morning! Paul Georgy with early morning comments for August 28, 2012 at 5:05 am. Grain futures are lower this morning. USDA lowered crop conditions for corn and soybeans by 1% in the good to excellent category. Corn harvest is progressing as the national average is now 6%. The rains that moved through the Midwest yesterday and over the weekend have improved attitude of producers as much as it benefited the soybeans and any corn that is still green. It now appears some moisture from Hurricane Isaac could reach the Midwest by the weekend. Bernanke will be giving a speech from Jackson Hole, Wyoming on Friday. Traders are expecting an announcement on QE3. This is where in 2010 the second quantitative easing was announced. It is likely the Fed will wait for the employment data in September to be released. Processors are saying they have enough beans until harvest gets into full swing. Yesterday afternoon Rich Nelson, Allendale’s Chief Strategist shared three facts that are important for everyone to know. There were seven years where it was extremely hot during pollination and a dry growing season which are being compared to this year. One: The Right Timing in hot years:
during those years, 5 topped with an average date of August 12. Current high for Dec corn was made on August 10. When using all 7 years the average high date would be Sept 15. The average sell-off was 22% for the 5 normal years and 18% for all 7 years. Two: The Right Price Rally:
when looking at price and yield comparisons, a 25% drop in yield equates to a 59% rally. Currently we have had a 60% rally in price. Three: The Right Timing per last year:
in 2011, we topped the corn market on August 28th
which thereafter ensued a 28% decline. Using this year’s high of 8.49, it would suggest a possible decline as much as 2.37 or to 6.12 in December futures. These observations have nothing to do with supply and demand but more to do with psychology. Call your Allendale representative
today and get all the details. Hog slaughter is very heavy compared to a year ago which is causing pork supplies to be large. The bright spot is hogs have improved performance the last few weeks with cooler temps. This should create smaller numbers for October. Beef producers are selling breeding herds as pasture conditions are poor and feed supplies tight. Boxed beef was lower today as buyers have filled their needs for Labor Day. Choice was down.16 and select was down 1.36. Pork cutout values were down 1.60. The Ag Leaders Webinar
is this evening at 8:00 pm sign up today.
Markets as of 5:05 AM
Dec Corn -1
Nov Beans -1
Sep Wheat +1 3/4
Oct Cattle -.07
Oct Hogs -.07
Sep S&P +1.75
Sep Dlr -.23
Oct Crude +.64
Dec Gold -10.10
Allendale Advanced Charts
Yesterday’s wild trade in Nov Soybeans put in a new all-time high of $17.60 ½. This new high does continue to validate the strength in the Nov Soybeans. However the fact that we closed 40 cents off the highs does indicate weakness in a market that made new highs on selling. If we do see a close below the 8/23 pivot low of $17.04 ¼ we could see the start of a peak and reversal process that could leave yesterday’s high in its wake as we begin the process of correcting from these levels.
Get technical analysis for corn, beans, wheat, cattle, hogs, crude and dollar markets.
Nelson Notes from the desk of Rich Nelson
annual Farmer Yield Survey is rolling ahead with full steam. We are now entering the halfway point in this year’s two week long survey which runs between August 20 and 31. We urge all producers to make your voice heard by submitting your numbers either online at www.allendale-inc.com
or by phone 800-262-7538!
This material has been prepared by a sales or trading employee or agent of Allendale Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Allendale Inc.’s Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Allendale Inc. believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.