Allendale Wrap-Up DATE \@ "M/d/yyyy" 5/11/2009
Corn: There were many conflicting factors to note today. While prices started lower, in sympathy with soybeans, prices did not stay down. Bears argue next week’s forecast will bring opportunity to advance planting. Bulls argue the right-now planting pace is still too slow. Also, we have crude oil supporting corn right now. The last bullish thing we have to note is Friday’s Commitment of Traders report showed Trading Funds bought 46,754 contracts last week and Index Funds bought 8,489 contracts.
Soybeans: Though the pit trade started out a bit lower this morning it did not hold. There were concerns that China’s H1N1 finding over the weekend would bring lower demand for pork, the key protein in the country. That concern carried over into ideas of lower demand for soybean meal and therefore soybean imports. They had 5 million tonnes of soybean imports in May and are scheduled for 4 mmt in June. We are not too concerned about this story for a few reasons. 1) We have heard many times in the past weeks/months that China was ready to abandon or cancel U.S. soybean sales. Time after time they kept on buying. 2) Even if China stops buying old crop soybeans they are still ahead of USDA’s pace. 3) They should stop buying anyway. China should have stopped buying U..S soybeans four to eight weeks ago. Anything we are getting right now is just butter on the top.
Wheat: Tomorrow’s report gives us the first look at how much damage winter wheat may have sustained this year. We had drought, a couple freezes, and good off and on rains since dormancy ended. With all of those factors in mind the trade is simply not sure what to expect. We have the guesses posted on the Grain Fundamentals report. Even with a drop in winter wheat production we still do not like getting bullish Chicago or Kansas City wheat. For trading we were stopped out of short positions last week and will wait for tomorrow’s report.
Rich Nelson is the Director of Research at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com
