Corn Fundamentals: the only fundamentals, which have changed in the most recent 24 hours is basis levels are improving as a result of the futures sell off. Futures are selling off as a result of weaker metals and energy markets and strengthening US dollar. New Crop Marketing: The total amount hedged, as a percent of anticipated 2008 production is 25%. 5250 versus the December 2008 contract is key trend line support; at 5174 is a trader momentum shift point. The immediate technical trend is bearish. We will monitor and alert when to resume hedges. Allendale projects fewer planted corn acres in 2008 than 2007 and may likely result in projected 2008/09 ending stocks of 617 million bushel versus present 2007/08 end stocks of 1.422 billion bu. Trade Posture: Technically futures are weakening but long term Allendale remains bullish to old and new crop given our outlook for reduced corn plantings in the spring of 2008. It must be noted the days of old crop stocks on hand, numbers 41, the second lowest dating back to 1999-2000. For the immediate we are willing to sell a corrective rally but will utilize a risk reverse just in case funds are willing to jump back in on the long side because of the strong fundamental outlook.
Soybean Fundamentals: the ongoing farmer strike in Argentina has closed the rather large gap between less expensive Argentina soybean prices versus those of the US. We do not expect the strike to last much longer. If you are inclined to sell inventory on a basis rally, one is in the midst and may be taken advantage of. New Crop Marketing: We will hold hedges of new crop at 40% of anticipated 2008 production and alert when to resume. Allendale respects the long term higher trending new crop futures technically. The rally has been holding since last July and has key support versus the November futures at 11600. Trade Posture: Allendale fundamentally is bullish to soybean, soybean meal and soybean oil futures, but technically bearish. Money flow is the key not only to oilseeds and its products but the starches as well. At present the situation at hand is a money flow game and has little if anything to do with existing fundamentals. Like corn, we are willing to sell corrective rallies but will utilize a risk-reverse just in case investment funds regain consciousness regarding tight supplies and increasing demand for protein and vegetable oils.
Wheat Fundamentals: Disappointing is news before Wednesday's opening, Egypt canceled its tender for wheat, Turkey bought Optional Origin and the bright spot is how Iraq has purchased 150,000 tonnes of US wheat over the past 48 hours. It did not take long for Egypt to announce after Wednesday's close it will re-tender for 55,000 to 60,000 tonnes of wheat. New Crop: The futures trend is up. Resistance is 11450, trend line support 10050 for CBOT SRWW. We see no reason to hedge new crop above the 65% level we have on for now. Fundamentals remain supportive and the contract is long term technically bullish. 8790 could be a bull to bear momentum price shift point. Trade Posture: Technically the new crop immediate trend is shifting from sideways to down and remains down for MGEX wheat. Long term, Allendale remains supportive to new crop wheat futures based on how weak 2008 winter wheat conditions went into dormancy. The days of old crop stocks on hand, numbers 37, the lowest dating back to 1999-2000.
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