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MGEX Research

RSS By: Joe Victor, AgWeb.com

Joe Victor is a Business Development Specialist with Minneapolis Grain Exchange, Inc., where he monitors cash grain activity and cash grain opportunities. He provides marketing advice through this blog.

Corn a Measure of Success

Jun 04, 2009
 
With east of the Mississippi River weather related problems, spring time planting for corn has been less than normal. It may come as little surprise Allendale Inc has reduced its yield per acre prospects for the 2009 crop. Allendale has officially released its complete supply and demand breakdown for corn, soybeans and wheat in anticipation of USDA’s June 10th crop production and world supply-demand estimates. These estimates may be viewed within Allendale’s ResearchCenter (www.allendale-inc.com).
What may be most surprising are the projected end stocks to use for 2009/10 corn working toward a record low level dating back to 1999. By reducing the yield per acre 2 bushels, Allendale Inc projects corn end stocks at 1.015 billion bushels and estimates end stocks to use at 8%, vs the previous level low of 9% in 2003. If this low level of end stocks to use continues its pattern, it likely represents supportive prices for new crop 2009 corn for the producer, but could constrict profit margins for the end users of corn within the feed, fuel and food sectors.
Take a look at the chart you will learn the projected end stocks to use for 2009 soybeans are also at a level of 8%. At first glance the end stocks to use for soybean appear to be at precariously low levels but look closer to realize since 1999, there have been five previous years when soybean end stocks to use have experienced tighter levels. Consider with less than cooperative spring planting of corn in the states of North Dakota, Missouri, Illinois, and Indiana, additional acres of soybeans are likely to be considered for 2009 and increase the end stocks to use for soybeans to slightly more than reasonable levels.
Allendale Inc needs to advise, the recent run up in corn futures is not likely solely at the hands of constrictive ending stocks to use but may also be influenced by its extreme tight correlation between crude oil futures price as long as the second largest consumer of corn is for ethanol. Other outside influences which bare intense scrutiny is the value of the US dollar as well as the Dow Jones Industrial Average trend.
Allendale Inc also advises to monitor the tendencies of the index and commodity funds. As you are able to view via our frequently updated “Outside Money Positions in Corn” chart both the commodity and index funds are adding to its long positions. It may come as little surprise to witness the aggressive nature of the commodity funds which began 2009 nearly 100,000 contacts combined futures and options short, presently over 100,000 contracts long.
Allendale Inc strongly advises it remains important to be aware of fundamental and technical chart developments in order to help assist in producer and end user marketing plans but do not lose sight of the outside influences which may be an overriding factor between success and something less.
Many questions do remain for 2009 as the industry moves forward. Allendale Inc has presented just a few of the influences it analyzes on a day to day basis and hope you are able to meld them into your plan. What are some of the key influences you study to assist in your marketing plans?..........Joe Victor
 
Allendale Inc welcomes any questions you may have by calling 800-551-4626 or
e-mail    research@allendale-inc.com
 
The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2009
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