Corn: It looked like on Monday that this market wanted to continue the trend from last week. While selling was in the corn again, there has not yet been a test of last support on the December at 352 3/4. It can be called "last support" because that level is our low from last year (on the December 2010 contract).
What may be even more shocking is before September ‘09 the last time we saw 352 was Feb. 14, 2007. Last year when we touched this level we started getting talk of what to do should we run into LDP and the like but within six trading days the price was back just shy of 400. Right after the opening, and then again mid-morning, there were attempts to sell the corn off but each time was met with good support making our last support level never really tested today.
Looking forward now we have a potential “turnaround Tuesday." There is one good reason to believe that may come true. Last week China disappointed this market by not making their usual Wednesday announcement of a purchase. This week they would be picking up corn at a 15 cent discount to last week if they make a purchase. Speculators are bound to attempt a front run at this purchase meaning they should be buying tomorrow. What better time to take a shot at being long anyway? Buying near the most solid chart support level with hopes China will reward that trade is a good decision to be made by anyone. Looking at the spec month of July, a buy based on today’s settlement with a risk to support means the risk would only be 2 cents. This has to be attractive to speculators.
Extended weather forecasts are now calling the 16 day forecast non-threatening which is a change from last week where it was looking hot and dry. That means weather has turned slightly more bearish. This was likely the reason for Monday's slide. This also means we need China to be buying more than ever. Going into this week we have one bearish factor with weather and two bullish factors. One being chart support levels with the other being potential China buying. Speculative traders can look to buy overnight or first thing tomorrow morning. Hedgers need to wait until Wednesday to see if China shows up or not…Ryan Ettner
Soybeans: Beans closed unchanged as outside markets consolidated. July continues to hold the 928-930 support but relentless pounding against any chart point usually wears it out. We do expect support to fail and for beans to move towards our 914 objective later this week unless there is a sell off in the dollar. Weather remains good unless you live between MO and OH where wet weather has hampered planting and damaged the existing crops. Crop progress shows 84% of the crop planted vs. 84% normal. Only MO and OH were significantly behind. Emergence was 66% versus 64% normal. Crop conditions at 75% good to excellent vs. 70% expected. This is a record for this week! It is also the best start of any year. Thus a little negative to process but the most important factor right now is trader attitude and right now that is cautious at best or negative…Bill Biedermann
Wheat: Phone in at 800-262-7538 or e mail research@allendale-inc.com your winter wheat harvest results. Allendale Inc is not in the camp that suggests neither short term harvest delays nor a large fund short position suggest a reason to take out an existing downtrend in July or Dec wheat. Spreads continue to weaken if wheat vs wheat or wheat vs corn. Wheat is a starch comparable to corn and rice which all three are bearish to price. Can wheat vs corn get weaker? You bet it can. The present opportunity is for the end user as new crop is harvested and blended with old crop to make the FIGIS grade. Opportunity knocks for the farmer when the calendar shows the months Oct and Dec for winter wheat and next Feb when we hit the month of Feb. Allendale Inc price projections for corn, beans and wheat are out there for the world to see via a Wall Street Journal article, months after you had them to work with. Rallies are to be sold as wheat is harvested…Joe Victor
Bill Biedermann is Sr. Vice President at Allendale. Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Joe Victor is Vice President at Allendale. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.
