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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.

Re-ownership Clock

May 25, 2010
                       Is it time to re-own inventory sold? Our seasonal indexes will suggest it is time if you want to take advantage of Allendale’s five year corn index heading into mid June and a month later for soybeans. As these indexes peak we have to marvel and take profit on re-ownership as the market peaks. At what level do you enter and take profit, you are the final decision maker and know the answer long before anyone else does.
            Fundamental considerations include the free fall of crude oil and the stock market for many reasons and conversely the rise of the US dollar and gold. The perception is these “outside” market actions are not friendly for the US grain markets, reality says otherwise.
            The “800 pound gorilla is in the room” is commonly heard on the CBOT trade floor with regards to China buying US corn. The bottom-line is China is buying US corn/DDGS whether to quell its escalating prices or delays in planting of its corn crop in the northeast and feed livestock herds/flocks in the drought south central region.
            Weather is a key driver for US grain prices and provided the quick start we have enjoyed for corn, talk has centered on reproducing a corn crop which is likely to be safe from temperature extremes and building of projected corn stocks. However not safe from the transition to El Nino to La Nina may be the soybeans as private weather services forecast a dry late July into August, when the soybeans need the precipitation the most.
            Allendale Inc recommends the use of box option strategies (buying a call option, and selling a put and selling a call) for re-ownership but once again you as the final decision maker you know what may be best suited for your particular business operation. Please do make certain you remain aware of the pending seasonals.
 
We welcome your questions.........Joe Victor
 
Allendale Inc welcomes any questions you may have by calling 800-551-4626 or
 
 
 
 
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. c2010
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COMMENTS (1 Comments)

Anonymous
In his current visit, Geithner is trying to get China to devalue the Yuan. The World seemingly needs a “busy” Chinese economy. What up with this and US Ag?
9:47 PM May 25th
 

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