Choppy corn trade, and China moves hogs

Closing Corn Commentary

Fundamental Support: More choppy trade was seen today as expected on a Friday profit taking day. The noon weather update put in a slightly cooler forecast for next week and just slightly more rain in the extended forecast causing corn to loose 9 cents in only two minutes of trade. That drop off was quickly supported but we should use that fast reaction as a warning shot. That was a small sample of what could happen if this forecast were to turn cooler or wetter. For now, that forecast is still plenty bullish to keep the current bull run going.

For hedgers, I think we can use today’s mini selloff as an eye opener to have a place incase weather on Monday is not as bullish as it was today. Outside market news consisted of European banks passing the stress test which sent the dollar slightly lower which was sure to add a small amount of support as well. All focus will be on what the Monday morning weather maps have to say.

Bulls have been given a couple short term setbacks to get long going into next week. Bears will want to be fast sellers on any weather changes, even on the Sunday night market. December still has next technical resistance of $7 which held today with contract highs of 722 ¾ being the next best resistance after that. Three days of a forecast change can mean a very drastic change on Monday. It is likely that a continued hot/dry forecast keeps a moderate pace bull move going while a cooler/wetter forecast has potential for a large scale selloff. When weather threats put over $1.10 onto price, the faster reaction would be a forecast that ends that rally…Ryan Ettner

Lower Yield: Last night we projected this year’s pollination would be hotter than 2002 and equal to 1995. As this chart shows, that would suggest a good decline for Illinois, and nationwide, yields. We are bulls and have brought yield down to 153.6 from USDA’s 158.7 on our balance sheet. Good soil moisture levels before this heat keeps us from taking an even bigger bite off yield…Rich Nelson

Trade recommendations: Sell December 649 sell stop, risk 659, objective 619.

Lean Hogs Commentary

The renewed focus on the upside, from China rumors in recent weeks, has improved bull spreads. The $11 area, shown on this chart, may temporarily slow this spread down. Overall, we still feel positive factors (corn rally, good exports, China buying, heat affecting production) outweigh the negative impact from heat affecting demand…Rich Nelson

Working Trade: (07/14) Bought August/sold December 9.35, objective 10.70 filled 07/15 for +$540.

About the Author

Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Steve Georgy is a Sr. Broker/Manager at Allendale, Inc. Jim McCormick is Senior Broker/Manager at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA.

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