Ag markets will close both electronically and in the pit tomorrow at 12pm central and reopen on Thursday at 9:30am
For the first time in a long time, there was nothing shocking in Friday's reports, with acreage slightly higher than expected for both corn/soybeans, while corn/soybean stocks came in relatively close to expectations. Without weather worries, the acreage figures could have been seen as bearish, but the trade is more concerned about the production on those acres than a few more acres. Many believe that soybean acres will fall in subsequent reports due to lost double crop acres on drought, with estimates as high as 500,000 acres lost. We have stated before that the risks were high of a 1988 scenario, and traders in the ECB are looking to compare this year's drought conditions to that of 1988, a year in which rainfall in spring and early summer was 8-10 inches below normal, although this year has been warmer with average temperatures in Indiana from April to June nearly 2 degrees above that of 1988 according to the Midwest Climate Center. At this point, the 2012 corn crop is still rated much better than the 23% good/excellent rating in late June of 1988.
Acreage Intentions
The midday GFS model is wetter in forecast compared to the EU and its overnight forecast solution for the weekend and early next week. It is also cooler, breaking the heat wave one day earlier with a back door cool front from NE Canada on Sunday. The GFS has rain chances (ring of fire) around a high pressure Ridge that holds across KS, MO and the S Midwest. This could produce rain across the Dakotas, Minnesota, N Iowa and Wisconsin into the Ohio Valley this week. Rain totals around the Ridge are estimated in a range of .25-1.00" with amounts to the south being traces to .4".
The 11-15 day forecast splits the Ridge with one half located over the Western US and the other the Southeastern US. A Trough with near to above normal rainfall would hold in between. This is a wetter solution in the 11-15 day period, which has typically been low confidence. The GFS has been much too wet for weeks and this solution is no different than prior incorrect updates.
Emotionally these markets are set for a top, the first sign of a pattern change, more than a storm, these markets fall as fast as they rose. The sign of pattern change, lesser heat and more moisture potential, will cause the market to violently drop because of the willingness by many to finally hedge and speculators wanting out. We are 50% sold on corn, beans and wheat new crop, and await much higher levels incase this weather threat becomes a major event. We are looking at 2013 pricing soon.
US Dollar Daily Chart
Corn
Last week I had implied on Monday and Wednesday that 655-665 is resistance. This resistance for now is holding. Climbing above this takes the current weather threat and turns it into a historical event I believe when a close above 675 occurs. Then you can just start picking numbers out of the sky as objectives. 7.00, 7.50, 8.00....... It's weather, make sure you have sold something up here, because it is that time of year where heat can bread instability in the atmosphere.
Hedge alert: Sold 30% of new crop at 663 on the March 13 contract. This takes us to 50%.
December Corn Daily Chart
Beans
Soybeans made a new weekly high, but no new high close. That will become concerning when we go into Turn-around-Tuesday with grains closing for a day and a half at noon tomorrow. Beans can take a lot right now, so are large break here is possible Tuesday.
November DailyBean Chart
Wheat
Wheat is technically bullish holding the 738-742 range. But it goes where corn goes.
SeptemberChicago Wheat Daily Chart
Live Cattle and Feeder Cattle
Higher corn values pressured cattle futures. Choice beef is trading in the $195 area, and ideas that a seasonal top is upon us also weighed on prices. Cash trade was very light last week, which leaves plenty of carryover for this week. Offers are $120, and $192 on a dressed basis, with no activity today. Supplies will get tighter later in the year.
August Live Cattle Daily Chart
August Feeder Cattle Daily Chart
Gold
This chart is a pinball machine with the support evident in the 1530-1540 region and resistce 1610-1615. The price seasonal for gold doesn't turn up till September, so price action will remain choppy until the downtrend line is taken out, or support is violated.
Gold Daily Chart
Crude
The US dollar turned one day before the last day/first day of the month expected turn we were expecting. 77.00 has now proven to be support. Look for oil to at least recover till mid-July with 79.00-80.00 being the buy zone for now.
Crude Oil Daily Continuation Chart
06-25-12
Link (in blue) below to view the latest market prediction interview on KFYR - TV:
NOTE: With the exception of livestock, all trades will be entered in the electronic markets unless otherwise noted. Hedge recommendations and Trade recommendations are totally separate, and may sometimes conflict with one another. It is strongly suggested that Spec trades and Hedge trades be done in separate accounts.
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A word to the Wise
Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable to Heartland Investor Capital Management , Inc. but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK of LOSS involved in trading futures and / or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL . NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. The information contained in this newsletter is privileged, confidential and protected from disclosure. Any further disclosure or use, distribution, dissemination or copying of this message or any attachment is strictly prohibited.
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