Grains Consolidate as Supply Battles Demand
Aug 20, 2012
Good Morning! Paul Georgy with early morning comments for August 20, 2012 at 5:10 am. Grain futures are higher as traders are looking at the weather forecast and news headlines for direction. Most forecasts are for cool temps this week and mostly normal precipitation for late August. The Pro Farmer crop tour through central OH, IN and IL will likely provide friendly headlines as those areas were some of the hardest hit by the drought of 2012. Out of the last 10 years, their estimate was below the USDA final number 6 times for corn and 5 times for soybeans. Crop ratings will be out this afternoon and most are expecting a steady number for corn and some improvement in soybeans. The CFTC commitment of traders report showed managed money adding to long corn positions by over 17,000 and adding to longs in all contracts in the soy complex. An observation: We have taken a further look at crop insurance protection for corn in IL and IN. They are two of the states hardest hit by drought. There is approximately 5.9 million acres between the 2 states that have no crop insurance protection. The producers in IL and IN have 70% and 65% of the corn crop protected by some type of crop insurance with nearly 78% covered by revenue protection plan. The takeaway from this information is that the agricultural community will likely have some dark spots in the months ahead. Another point is producers need to consider ways to protect the current price level as the fall option for the insurance is calculated by taking the average for December futures during the month of October. Cattle-on-feed report was neutral and should have little impact on futures when they open. Traders will be focused on grain prices and action in the equity markets at 9:05. Boxed beef was higher again Friday. Choice was up 1.55 and select was up .32. Pork cutout values were up .36 to close out the week. Stay in touch with Allende Advisory as we start our annual Allendale Yield Survey. You know your fields better than anyone. You can call us with your yields or fill out the survey form on our homepage. Thanks in advance for your help.
Markets as of 5:10 AM
Dec Corn +7 3/4
Nov Beans +13
Sep Wheat - 1/4
Oct Cattle stdy-lwr
Oct Hogs stdy-lwr
Sep S&P +1.00
Sep Dlr -.02
Sep Crude -.05
Dec Gold -2.80
Allendale Advanced Charts
Dec. Corn is attempting to recover from the major rejection that was put in on 8/10. However this recovery attempt is beginning to slow down at higher levels. The smaller ranges and lower volume numbers are implying that buyers are beginning to lack conviction at these higher levels. Structurally this leaves the Dec Corn chart looking very weak at these levels. While the uptrend is still intact we are showing signs of fatigue above $8.00 a close below the 8/15 $7.86 low we would advise neutral stance for speculators and a priced stance for producers…Frank La Placa
Get technical analysis for corn, beans, wheat, cattle, hogs, crude and dollar markets.
Nelson Notes from the desk of Rich Nelson
The market is looking for confirmation of USDA’s 123.4 August yield estimate. It may get that confirmation from the Allendale Inc. annual yield survey. Respondents come from all geographic regions of all key Cornbelt states. This year’s two week survey starts on today! Share your estimates here
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.