Friday morning’s release of its 2011 acreage predictions by Informa Economics has left room for the corn bulls to run free, says Jerry Gulke, president of the Gulke Group. Couple that with a higher placement figure in Friday afternoon’s Cattle on Feed Report and the bullish sentiment keeps building.
"Informa did an about face from what they did in November and gave the bulls a little more room to buy corn. They lowered their corn acres down to 90.8 million acres, which is closer to what most of thought was reasonable anyway."
The difference? Informa’s November number was based on economic modeling. Friday’s estimates were based on an actual farmer survey.
In fairly light pre-holiday trading this week, corn and soybeans touched their weekly lows on Monday and reached the weekly highs on Friday. Friday’s closes came off the highs, but finished the week higher in both complexes. Wheat did the exact opposite, setting a weekly high on Monday and weekly lows on Friday.
After the market closes on Friday, USDA released the December Cattle on Feed Report
. Overall on-feed placements were surprisingly 1% higher, which is bullish for the corn market.
"Most of the belief is that economy is turning around, so we’re going to need more beef. The placements were pretty high and the marketings were also pretty high. They’re staying current, but there are also a lot of them in the feedlot, so that’s bullish corn."
As we enter Monday trading, Gulke fully expects the corn market to open higher with this onslaught of bullish news. If that’s the case, technical factors start factoring in as the corn prices "If we open higher and we crash and burn, then we’ll have a lot of people getting out of this market. So we have to watch what happens then and then watch the price of cattle, as well."