Spike High Raises Concerns Of Blow Off Top
Aug 13, 2012
Good Morning! Paul Georgy with early morning comments for August 13, 2012 at 5:05 am. Grain futures are lower on follow through profit taking after Friday’s USDA Report. The dramatic drop in yield for both corn and soybeans by the USDA makes the report very believable. We would not be surprised to see further reduction in months ahead. The drop in demand due to high prices and expected supply tightness has caused traders to take profits on rallies in December corn. The weather forecast is cooler than expected for the next ten days with chances of showers which also is providing a reason for profit taking. The reversal in corn on Friday has many looking at the chart pattern as a potential blow-off top. It will be important to test Friday’s high in corn this week to keep the upward momentum running. Crop conditions report this afternoon could show an improvement in soybeans due to recent rains. The outside markets will be getting more attention now that the Olympics have concluded. Cattle futures should be supported on the opening due to the sharply higher boxed beef on Friday. Choice was up 2.43 and select was up 1.02. Hog futures are struggling with high grain prices and the negative breakeven. We should see an increase in liquidation in the pork industry over the next several months. Pork cutout values were down .11 to close out the week. Get all the details by subscribing to the Allendale Advisory Report.
Markets as of 5:05 AM
Dec Corn -6 1/4
Nov Beans -13 3/4
Sep Wheat -12 3/5
Aug Cattle Stdy-Higher
Aug Hogs Stdy-Higher
Sep S&P -1.75
Sep Dlr -.07
Sep Crude +.71
Aug Gold +3.70
Allendale Advanced Charts
Friday’s trade in the Dec Corn saw new highs on selling. The $8.49 high is now the pivot high that all bearish decisions should be risked against. In terms of a one day technical pattern new highs that are rejected can only be considered negative. We also put in an outside range day down which is a bearish one day pattern at the top of the chart. All of these factors considered we may have seen enough of a change in short term momentum that we may see a pullback from these higher prices.
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Nelson Notes from the desk of Rich Nelson
USDA lowered corn yield more than expected to 123.4 bushels per acre. Harvested acres declined by 1.5 million. That was lower than the 2.0 to 2.3 million much of the trade had been expecting. Combined together, this dropped corn production a large 2.191 billion bushels. However, due to a 115 million drop in old crop demand and a 1.495 billion drop in new crop demand, the demand offset was 73% of the decline. New crop ending stocks declined from 1.183 billion to 650 million.
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