Rally in Dec. 12 Futures Presents Pricing Advantage
Jan 05, 2012
Good Morning! Paul Georgy with early morning comments for January 5, 2012 at 5:00 am. Grain futures were lower overnight. Prices retreat on lack of fresh bullish news and potential weather relief in South America. Weekly export sale will be released tomorrow at 7:30. The Index fund rebalancing should take place between now and mid-January. The USDA report next week and the Chinese New Year Holiday are likely market movers ahead of us. Will China lower rate ahead of holiday to stimulate their economy especially in the auto and appliance industries? The stronger PMI numbers being released from countries around the world have traders looking for higher jobless numbers in the US on Friday. The EU credit stress has not gone away. Weather in Argentina is critical to near term prices in corn and beans. Drew Lerner from World Weather Inc. says "The bottom line, Argentina intensifies crop stress through the weekend with production potentials in decline. Rain that falls Jan. 9-11 will be sufficient to ease crop stress, but it will come too late to reverse some of the production losses in early corn, sunseed and a few other crops. Improvements will occur in many areas, however." You can ask Drew any question about weather on Jan 20 at the Allendale Leaders Conference.
Sign-Up Today! Beef cutout values were slightly lower on Wednesday. We are expecting values to come under pressure late this week as packers move into a full slaughter week. Cash cattle have been quite with offers steady higher and no solid bids. Pork values are lower and traders are looking for export demand to provide support through a week or two of larger slaughter. We are using this rally in Dec 2011/2012 corn as a pricing opportunity. Call your Allendale representative to discuss specific strategies for you. 800-262-7538.
Markets as of 5:00 AM
Corn: 3 to 5 lower Beans: 9 to 11 lower Wheat:5 to 7 lower
Live Cattle: 10 to 20 lower Lean Hogs: 25 to 40 lower
Dollar: .49 higher Crude: .70 lower Gold: 1.20 higher
Allendale Advanced Charts
The dollar rebounds and closes above the 20 day moving average. Will the 3 day rule keep the uptrend intact? Filling the gap left on Tuesday is giving the bulls hope new highs can be made.
Nelson Notesfrom the desk of Rich Nelson
Allendale’s favored meteorologist, Drew Lerner, shared with us his thoughts that the drought in Argentina is probably similar to 2010/10 but not yet at 2008/09 levels. This analysis is based solely on vegetative health maps. He notes dryness has been severe but this time around it is not coupled with extended heat. Allendale currently estimates the 2011/12 crop, harvested in spring 2012, at 24 million tonnes.
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