Short Covering Rally Supports Grains
Nov 28, 2011
Good Morning! Paul Georgy with early-morning comments for Nov. 28, 2011, at 5:20 a.m.
Markets rebound on short covering and a risk-on attitude by investors. A dose of "hopium" again boosts the euro against the dollar and yen. Talk of the IMF providing a loan to Italy may provide a reason for a bounce in an oversold market with light volume. The euro has rallied as European leaders work on a framework for the region. There is some talk that funds could be back in the market as November ends and December starts. We are in holiday markets, which usually mean light volume and very choppy price movement. December contracts of corn and wheat are approaching first notice day, where longs need to be out or risk delivery. South America received rain last week with 85% coverage. Another system is expected to move through their growing region within the next seven days. Demand is still the hurdle grain traders have to deal with. Basis in most areas are well above normal. Historically, the strongest basis occurs in early December, when harvest is complete and farmers lock the bin doors until the new year. Ethanol processors have been aggressive buyers of corn in order to take advantage of the blend credit, which is going to disappear on Jan 1. Livestock should open higher in response to outside markets. Cutout values were lower for beef and pork. Check out the end-of-year special for the Allendale Research Center. It is time to get registered for the Allendale Outlook Conference.
Markets as of 5:20AM
Corn: 13 to 14 higher Beans: 15 to 17 lower Wheat: 9 to 12 higher
Live Cattle: called higher Lean Hogs: called higher
Dollar: .80 lower Crude: 3.07 higher Gold: 29.50 higher
Allendale Advanced Charts
Corn finished on a weak note Wednesday, settling into a new low for the move. This brings the price closer to key support at 5.72 1/2, the low from October.
Nelson Notes from the desk of Rich Nelson
Sales in beans were trending weak before November and may be still weak after November. This is why we had that low price projection that may be filled soon. On top of that, the seasonal facts are not as rosy as the trade’s perception of seasonal...Rich Nelson
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