Allendale Wrap-Up 8/10/2009
Corn: Last week’s price break took care of reversal in the heat ridge. This week will see mild temps that warm for a period in the weekend. Next week, using the government’s six- to 10-day forecast, will see normal to below normal temps and normal to above normal precipitation. One important point is the above normal precipitation range is set for the far western cornbelt. We have some Nebraska based clients that are going on weeks now of no rain. That may help alleviate some of their concerns.
Soybeans: The benign weather forecast is the primary reason for lower trade today. A secondary reason may be the numbers given by the trade for Wednesday’s report. The average trade guess is to see new crop ending stocks fall from 250 down to 221 million bushels. One key issue here is even with the big soybean purchases from China two weeks ago, the numbers will remain over 200 million. Allendale is sitting with a 259 million bushel number. Essentially, even with small old crop numbers, we still feel USDA needs to drop the new crop export numbers.
Wheat: There is clear agreement among both Allendale and the other analysts on Wednesday’s wheat numbers. Due mainly to better spring wheat conditions we expect new crop ending stocks to increase from 706 million bushels to 738 (Allendale) or 737 (the average estimate). Other bearish news is the story that France raised its 2009 wheat production estimate slightly. Essentially, based on supply/demand fundamentals we can point to $4.75 basis the December Chicago as an objective.
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
