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Alpari Grain Report 10/02.

( Fridays USDA monthly crop report unveiled a few surprises on the quarterly stocks report to create some real report day volatility. The first was in corn. Corn stocks on hand as of September 1 were estimated at 988 million bushels the lowest in eight years, under the average pre-report trade estimate of 1.145 billion bushels and near the low end range of pre-report estimates of 887 . The range was 887 to1.350. This had corn up the 40 cent limit at days end. This suggests to traders that the ending stocks inventory or carryover on the next USDA crop report October 11 will come in lower.Beyond the report, the bullish numbers are just another bullish fundamentals along with many that arose from the summer drought. As you know we had been forecasting 7.05 as an imminent low to be met on the downside for December corn with 6.75 the bottom of a gap on the chart as worst-case scenario. Well, 7.05 was hit Friday before the report rally at 7:30 AM central time. Many traders used that low as a chance to pull profits off short held positions and others to buy long all ahead of Friday's report release. Now the question is, with the report Friday adding new bullish news, will the 7.05 hold as a mid harvest low or will harvest pressure and weak demand continue having us test that low and push the gap.Beans saw estimated stocks on hand as of September 1 at 169 million bushels versus pre-report trade estimates of 130 million bushels and over the range of 110 to 152. This bearish surprise suggests to traders that the USDA October 11 crop report may rains ending stocks. Prior this report, thinking was the 5% September increase in the good to excellent condition for beans would have us an increase in production and ending stocks, so next week prior the report's release we should expect some long liquidation.Mondays crop condition report after the close showed 25% of the corn crop is in good to excellent condition up 1% from the week prior and 3% over the years low September 10. Harvest was pegged at 54% complete. That's important, reason, we're 1.00 off the high and theres now a lot of corn available. Value and availability is usually followed by demand. Last year we dropped two dollars in September. Demand soared in October and corn rallied 1 dollar by Octobers end. We will keep a close eye for demand now as that's what's needed to rally from here to any measurable level above 8.00. Bean condition came in unchanged at 35% good to excellent condition and 54% a year ago. Were 5% over the September low. 85% of the crop has dropped its leaves and can be harvested. 40% is harvested. the AG weather site sees generally dry weather the next seven days allowing corn and bean harvest to progress quickly. Beans need a surge in demand to 1 million metri tons weekly to get back to 17.00. Wheat planting came in at 40% complete and 12% emerge from the ground.The last two weeks saw good rains in the Western winter wheat states lending to good early emergence. noted .50 to 4.0 inches of rain fell across Texas and Oklahoma this past weekend with more rain this weekend for Kansas and Colorado. The weather is near perfect for planting and emergence compared to a month ago when drought gripped the Western wheat belt states. Were still in our post growing season, harvest pressure time as the weeks pricing of futures are showing after pricing in Fridays crop report. Harvest lows are near and the charts may show us the bottom.Fridays bullish corn stocks reports suggest that 7.05 may hold for December corn through to the October 11 USDA report but beans look for new lows. Thursdays weekly export sales report should give us our next chance for a bean rally on the day as exports remain good and were the only port to buy from and harvest is underway.Technicals read like this. December corn support is 7.45 then 7.25 with resistance 7.65 then 8.00. November bean support is 15.05 then 14.85 with resistance 15.70. December wheat support is 8.55. A close under and 8.15 is next. Resistance is 8.95 then 9.20.This report and many of the other past reports are posted on the website, so anyone wanting to go back to the archives, feel more than welcome.Disclaimer: Trading foreign exchange, commodity futures, options and other over-the-counter products carries a high level of risk and may not be suitable for all investors. The high degree of leverage associated with such trading can result in substantial losses, as well as gains. The past performance of any trading strategy or methodology is not indicative of future results, which can vary due to market volatility; it should not be interpreted as a forecast of future performance. You should carefully consider whether such trading is suitable for you in light of your financial condition, level of experience and appetite for risk, and seek advice from an independent financial advisor, if you have any doubts. Alpari (US), LLC is dually registered with the CFTC as a Futures Commission Merchant and Retail Foreign Exchange Dealer and has been a member of the NFA since 2007 - Member ID: 0379678.

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Publication:International Business Times - US ed.
Article Type:Report
Geographic Code:1USA
Date:Oct 2, 2012
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