Corn Commentary: Monday's trade focused on the dry weather outlook for primarily the eastern cornbelt but succumbed to weakness in the wheat trade. Weekly corn inspections failed to meet the minimum amount required to suggest a USDA export target of 2.425 billion bushels will be reached. For Tuesday, corn is likely to take its lead from the wheat direction and principle outside futures trade of first the crude oil and then the U.S. dollar. Weekly NASS good to excellent corn conditions dropped its expected 3% vs. week earlier levels and is not expected to be a factor for the evening electronic trade.
Corn Technical Commentary: Dec corn did visit above 38% retracement but closed below it and the short term up trend. Monday's trade did incur an outside day down. Both indicators suggest lower trade to start. Key support is 5800 vs. the Dec with overhead resistance $6.28’6.
Vital Technical Indicator: there is not a projected major turn day in store for corn over the next three days.
Trade Idea(s): Dec Corn, Buy 1 @ $5.780. Risk $5.62. Obj. $6.42.
Option Strategy(s): Dec Corn, Buy 1 620 call @ 28. Risk 18. Obj. 52
Soybean Commentary: the trade's key focus on Monday was the less than expected previous weekend rainfall and forecast for limited rains for the east soybean belt for this week. Capping ideas of a major rally is the absence of any major Midwest frost-freeze for at least the next week to 10 days. Weekly soybean inspections failed to meet the minimum amount required to suggest a USDA export target of 1.145 billion bushels will be reached. Weekly NASS good to excellent soybean conditions dropped 1% vs. a pre release anticipated amount of 2-3%. Look for the evening electronic trade to trade this information with a bearish slant.
Soybean Technical Commentary: Nov soybean futures closed on top of 38% retracement, which is just below the 100-day Moving Average. The up trend remains intact although futures closed well of its highs. Key support is $13.06 with key resistance of $14.02
Vital Technical Indicator: there is not a projected major turn day in store for soybeans, soybean meal or soybean oil over the next three days.
Trade Idea(s): there are no new futures only trade recommendations.
Option Strategy(s): Buy 12.80 call at 85¢ or better. Risk to 65¢.
Obj. $1.60
Wheat Commentary: the combination of a wetter forecast for much needed rains in Australia and Argentina, Iran telling the world it has no plans to buy wheat from the U.S. and Russia's shocking news its grain harvest to measure 95 million tonnes vs. its previous estimate of 85 million tonnes. After the close of the Monday side by side session and before the evening electronic trade, the National Ag Statistics Service estimates spring wheat conditions fell just 1% this latest week vs. an anticipated 2-3%. Look for the electronic trade to trade the conditions with a bearish slant as well as the fact, wheat futures at all three exchanges closed near the Monday side by side session lows.
Wheat Technical Commentary: KCBT Dec wheat futures pulled back to 50% retracement which is also near the 100-day Moving Average, according to our Allendale Advanced Charts. This $8.95’6 level is expected to be key support. Key resistance for Sept CBOT wheat is $8.67’4, key support is $8.15’4.
Vital Technical Indicator: there is not a projected major turn day in store for wheat over the next three days.
Trade Idea(s): Dec KCBT Wheat :(08/25) Bought 1 @ $9.11. Risk $8.94. Obj. $9.64.
Closed @ 9000
Dec Minn. Wheat :(08/25) Bought 1 @ $9.34. Risk $9.18. Obj. 9$.92.
Closed @ $9.29’2
Option Strategy(s): there are no new options only trade recommendations at this time.
* Welcome to Allendale's 19th annual farmer driven crop yield survey.
The formula to estimate yield is found on our Commodity Calendar page. The survey results will be released at 7:30 am central time on
Sept. 5, with USDA releasing its results on Sept 12. You may
fill out the survey form via calling an Allendale Representative
@ 800 551 4626 or via our Allendale Internet site
www.allendale-inc.com
Lean Hogs: It was a bit surprising to see today's kill come out at a big 431,000 head. That was above the private market guess, which includes Allendale’s estimate of 425,000 head. Main point here is packers may have lined up a bigger kill than expected for this week. Given the fact cash hog prices are free falling they are not having to bid up to get those big supplies. This afternoon the pork cutout dropped $1.14. It is clear we have big supplies, which will get nothing but bigger in the coming months, and prices are falling. The lean hog index will be $86.90 tomorrow. That applies to Friday's cash hog trading. Futures are implying that index, a measure of cash hog prices, will be $74 on Oct. 14. We wonder if that is low enough. Also bearish for cash hog prices keep in mind next week is a limited kill week due to the holiday. On the deferred 2009 contract pricing we can simply point to corn as a reason why we are not hedging those periods. Higher corn means higher 2009 deferreds for now. Stay slightly bearish nearby's and neutral (if not a little bullish) on deferreds.
Live Cattle: There are a few conflicting things keeping this market stagnant. Friday's Cattle on Feed report was clearly bullish. Placements in July were much lower than most analysts expected. On the bearish end we have cash cattle. Most action last week was $99. There is talk we have a small bump higher in marketings come the first two weeks of September. Wholesale beef prices are currently trading mixed. Once we get past early September slaughter ready cattle numbers may tighten up a bit. For price direction we feel the October is about correctly priced. For speculative trading buy breaks or sell rallies. A better bet is our recommended short strangle position (sold 1 $112 call + sold 1 $105 put) position on the October. If October expires from $105 to $112 you keep all $3. The position is not a loser at expiration until prices are below $102.
Rich Nelson
www.allendale-inc.com
As always, if you have questions or comments, please call 800 551 4626 to discuss or send an e mail to research@allendale-inc.com
Allendale is registered with the CFTC and NFA and is a member of the NIBA. 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. c2008
