Crop Conditions Drop Further
Jul 17, 2012
Good Morning! Paul Georgy with early morning comments for July 17, 2012 at 5:15 am. Corn and soybean futures are lower as recent buyers take profits. Chartist will be watching for a key reversal after markets opened sharply higher yesterday evening. Monday’s low will be important support today. We are in a weather market and we need a change in events to convince traders that the supply side of the balance sheet has stabilized. A statement taken from World Weather Inc. says, "…The bottom line remains one of serious concern over declining corn and soybean production potentials in a large part of the U.S. Midwest. The region of greatest declining production potential is now in the southwestern Corn Belt from Kansas, Missouri and a part of Illinois into Iowa, Nebraska and a part of South Dakota. Temperatures will continue warmer than usual with limited rainfall resulting in net drying for many areas and continued plant stress that will maintain downward pressure on production potentials…" Crop ratings did not disappoint the bulls. Corn G/E fell by 9% when most traders were looking for a 6 to 8% decline. Soybeans ratings went to 34% G/En down 6% from last week and not far off the estimate of 3 to 5% the trade was talking about early yesterday. South Dakota took the biggest drop in G/E as it was down 18% to 41% G/E. Missouri is the hardest hit state overall at just 10% rated G/E, down 3% on the week. Indiana is just a bit better at 11% G/E and Illinois was rated 17% G/E. Russian Ag Minister reiterated in spite of lower production numbers, Russian exports are expected to reach 18 to 20 mmt. Rich Nelson did a study on demand deterioration due to price rallies in corn. We realize it is important to find out corn and soybeans production but we must realize the damage price rallies due to overall demand. It is important to note demand doesn’t come back quickly. More details will be discussed on the July 24th,
Allendale Ag Leaders Webinar. You can sign up today. Feeder Cattle futures have come under tremendous selling due to high feed costs and large losses cattle feeders are seeing at close out. We are hearing reports of a large number of cows going to market because of lack of feed supplies and high costs. Boxed beef was lower again on Monday choice down .10 and select down .38. Pork values were down .68 also. Subscribe today to the Allendale Research Center
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Markets as of 5:15 AM
Dec Corn -6 3/4
Nov Beans -9 3/4
Sep Wheat -13 3/4
Aug Cattle -.62
Aug Hogs -.47
Sep S&P +4.25
Sep Dlr -.06
Aug Crude +.06
Aug Gold +2.70
Allendale Advanced Charts
New highs were established in the Nov Soybeans again during Monday’s trade. While we were not able to probe the psychologically significant $16.00 level, we have established yesterday’s low of $15.58 as the new minimum risk objective this market must respect in order to keep the uptrend intact.
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Nelson Notes from the desk of Rich Nelson
The trade is eager to see the new NOAA long term outlook for the month of August. That will be out on Thursday. It was their June 21 release, for the month of July outlook, which turned Allendale supportive to the market. This week’s update could give us more insight on soybean yields.
There is a significant risk of loss when trading futures and options contracts. This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named, and each investor should consider the appropriateness of trading on this information, based on their objectives. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to accuracy. Past performance is not indicative of future results.