One is Not Like the Other
Nov 27, 2009
Allendale Inc suggest the closer to 70% harvested a crop is, the closer we come to the heaviest part of the harvest for that particular crop we are and transition away from the production phase and enter the demand phase. Those involved in the evolution of the grain trade will always look to the weekly exports for corn and wheat while soybeans add in the monthly U.S. Census Bureau of soybeans crushed (NOPA reduces the level by approximately 6 million bushels/month and worth noting).
Soybeans are well more than 70% harvested and performing admirably as both exports and crush are working in positive demand phase tandem. Weekly export sales of soybeans are running 75% of target while shipments are running 31% above (Allendale Inc updates weekly). The U.S. Census Bureau soybean crush is 9% above target and Allendale Inc is poised to ask the question will USDA increase in its Dec WASDE the necessary 23 million bushels? Will the export baton be handed off to Argentina and Brazil in April/May of 2010 as it normally does, experience tells it will but we will continue to follow the 3-5 day forecast to see just how aggressive S. America will become it 2010. Allendale Inc has not wavered with its 2009/10 recommendations by selling soybeans off the combine and into the cash market in this demand driven, less than full on or off farm cash and futures carry market.
Corn remains but is doing is best to transition way from its production phase into its demand phase and relays upon the weekly export sales market as its initial barometer. US corn sales are running 37% of target and as of 11/27/09 are at a pace which suggest a target of 1.431 billion and not the 2.100 billion bushels which the USDA is presently using. Allendale Inc is well aware of the 4.25 billion bushels which ethanol is anticipated to use and is not in the camp which suggest ethanol blend will jump from a national blend rate of 10% to 15%. Allendale Inc remains bullish to the corn and soybean meal utilized for poultry feeding but remains bearish to USDA projections for feeding of meal and corn to dairy, beef and pork.
Fundamentals suggest a weaker outlook for corn and wheat as they are not demand driven, soybeans are. However are we trading fundamentals?
We welcome your questions and comments.........Joe Victor
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