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"How wonderful it is that nobody need wait a single
moment before starting to improve the world."
- Anne Frank
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Commentary |
Grain futures recovered smartly today with the US dollar weaker and as soybean futures on the Dalian Commodity Exchange settled 0.3% higher Monday because the government began stockpiling soybeans for state reserves at price 15% higher than last year, shrugging off a sharp decline on the CBOT after China cancelled delivery of around 10 soybean cargoes. China this week will temporarily suspend auctions of soybeans from state reserves as it starts stockpiling new-crop soybeans, the state-backed China National Grain & Oils Information Center said.
Futures were also higher overnight and today as investors covered their shorts and took their lead from strong demand in the cash markets. The delayed shipment of more than 1.5mmt of Brazilian corn to East Asia was supportive for prices, with talk of importers seeking more US corn to offset delay in deliveries from Brazil. Last week, respected French analytical firm Strategie Grains forecast EU corn imports at 11.5mmt vs. the USDA's 6.5mmt estimate, much of which could come from the US now that Ukraine/Brazil are close to tapped out.
Corn drew support Friday and rallied from its lows after the Environmental Protection Agency said it is moving forward with a mandate for corn ethanol in gasoline, denying requests to waive the requirement following a drought that pushed up corn prices. The EPA said Friday it hadn't found any evidence that its renewable fuel standard is causing economic harm. The agency said suspending the standard would reduce corn prices by only 1%.
Wheat should continue to draw support as the Plains wheat crop will be entering dormancy with soil moisture at their driest levels going back to the 1930's. The lack of soil moisture is stressing wheat seedlings and agronomists are starting to elevate their worry on yield prospects as soil heaving and a lack of tillering in powder dry soils could curtail yield potential. In a year of acute feed shortages, cattle grazing and the amount of wheat available for feed next spring will be adversely affected and could leave ranchers will little choice but to put cattle into feedlots earlier than normal, pushing up corn feed demand.
US Dollar Daily Chart
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Corn |
Corn has successfully tested and held the September 27 low. Closing above the downtrend line that has held all fall would signal that low is in and that a wave "3" of wave final wave "5" from the 2008 low is underway. End-users should have their spring and summer needs for 2013 covered now.
December Corn Daily Chart
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Beans |
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Soybeans came very close to the 1360 region target we gave. Thanksgiving week is known for its positive price swing. Corn will probably be the determining factor if beans have bottomed or not, as corn is the protein that prices all protein in the world. Corn goes up, beans get drug up.
Jan Bean Daily Chart
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Wheat
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Last week we said KC wheat (the largest wheat class we grow) had room to be drug down to support if beans and corn fell. They did and now need to show some backbone. Closing under 870 two days in a row we would not want to be seen. We are in the seasonal time frame where wheat should rally into the first week of the year.
Kansas City Dec Wheat Daily Chart
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Live Cattle and Feeder Cattle |
The Cattle On Feed report Friday was considered neutral, as the numbers came in right on trade expectations. Choice beef is $193 with packer margins of a negative $68 per head. There is seasonal trade coming up, selling Live Cattle and Feeder Cattle futures on November 27th, and holding for two weeks for an average gain of $2 per cwt. The trade has been profitable 14 out of the last 15 years. A neutral stance is advised for now, with a bullish supply outlook for 2013....especially if moisture develops.
December Live Cattle Daily Chart
January Feeder Cattle Daily Chart
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Gold
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Gold technically blew it, but came back from what could have been an ugly sell off. The bi-partisan press conference on Friday near noon saved most commodities and stocks. That is until someone starts throwing sand in the sandbox again in DC. A close over 1740 projects 1770-75.
December Gold Intraday Chart
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Crude |
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We are switching to the January crude oil contract. After today, a saucer bottom formation can be seen starting to form on the chart. For the January contract 85.00-85.50 is becoming solid support. A close over 90.00 projects resistance at 94.00-94.50 to be challenged.
January Crude Oil Daily Chart
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11-20-12
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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.
Newsletter provided by Heartland Investor Capital Management, Inc. a registered CTA with the NFA, of which Eugene Graner is principal. This entity is a separate legal entity from the Introducing Broker Heartland Investor Services.
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