The trade has been talking about today’s acreage and stocks report for weeks. It appears the trade did a very good job of anticipating the acreage numbers but underestimated the stocks numbers for corn and beans.
The immediate reaction to the prospective 88.79 million acres for corn and the 78.09 million acres for beans was: Where are all the acres at? The overall trade reaction is that corn and bean acres, if weather permits, are going to grow. With the big stock numbers, the upside potential of the markets have now become very limited.
Essentially, the only way I think December corn can get back above $4 and November beans back above $9.50 will be a rather significant weather event dovetailed with solid demand growth.
Today’s sharp break should start finding support in the May corn contract around $3.42, but the deferred December corn could still correct to the $3.70 level. The real concern for me is the bean complex. For the last several weeks it’s been the strongest commodity in the ag complex. It was obvious, with the weakness in the old crop, that some trapped longs wanted to liquidate before the end of the month. November beans closed right at technical support.
In my opinion, a gap lower opening tomorrow should be very negative for November beans. A close below $9.05 would suggest lower price action even though the market has sold off sharply over the last week. The problem now is a close below $9 opens up the potential for a move to $8.75 which must hold. Since spring and summer weather scares are still in front of us, I have to believe there will be one more series of weather induced rallies but it’s going to be very difficult now for the market to get back above $9.25.
Overall, I believe the market will most likely be very range bound. Upside rallies will fail to meet producers expectations and, if we don’t watch out, there will be plenty of unpriced corn and bean this fall.
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2010.