Allendale Wrap-Up 3/8/2010
Corn: Friday’s commentary from Bill was very meaningful. In that commentary, a chart showing unleaded gas (RBOB) was overlaid with one of ethanol. Instead of mirroring each other, unleaded gas was rallying while ethanol was tanking. This is very important for us to monitor. The price of corn fluctuates directly with the changes in ethanol. If a link in the crude-unleaded (RBOB)-ethanol-corn chain is temporarily broken, we will continue to trade grain-only fundamentals.
Soybeans: It was interesting to see soybeans act as the strong market today. Officially, a lower U.S. end stock number set for Wednesday could be overshadowed by an increase in South American production for big picture items. Also, traders are concerned about planting delays possibly pushing acres into corn.
Wheat: Fundamental news is a little sparse these days for wheat. On the world side, in the coming days we will hear more talk that India will temporarily lift its ban on exportation of wheat. That has been in place since 2007. The only real question left is deciding how much to export. On the U.S. side, we will see USDA make a small adjustment to old crop ending stocks on Wednesday. The average guess suggests a slide revision from 981 to 971 million bushels. That move will be made as USDA ups their export estimate. Whether they tell us ending stocks are 991, 981, or even 961 really does not matter though. These are still the largest wheat stocks since 1987.
Rich Nelson is Director of Research at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA.