Allendale Wrap-Up DATE \@ "M/d/yyyy" 6/30/2009
Corn: Weather was the name of the day. Forecasts show generally light rains for the eastern cornbelt and no rain for the western cornbelt this week. However, temps will be mild and there are good rains scheduled for the weekend. Additionally, the weekly update of the soil moisture map showed a sharp improvement in Illinois and Indiana conditions.
Soybeans: The biggest thing which strikes us when looking at the soybean complex is the old crop/new crop spread. July futures are now holding over a $2.30 premium to November. And right now, there is nothing out there suggesting that spread won’t continue to widen. Our numbers suggest USDA will drop old crop stocks on the July 10 monthly supply/demand report. Allendale, and others in the trade, look for soybean acres to increase on tomorrow’s report. Whether only 1 million or up to 3 million acres are added, there will be a stark transition from tight old crop stocks to more than plentiful new crop levels.
Wheat: We have noted that the May price rally was overdone and this market is now beginning to get nearer true value. We have that level pegged for Chicago wheat from $5.00 to $5.50. Apparently the trade is also feeling wheat futures are overvalued with estimates of big deliveries totaling 4,000 to 5,000 contracts.
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
