Mixed news
Posted by Tim Hannagan I PFG Best Research • Friday, July 23. 2010 • Category: Rohstoffe
Thursdays weekly export sales report came out putting wheat exports last week at 382 t.m.t. up 24% from the previous week. This suggest that some buying for insurance against falling world production may be beginning. With 950 m.b. sitting in U.S. storage there’s no threat of running out the next 12 months but fear of continued world production declines may lead more end users to move from hand to mouth buying as needed to buying 10% more to lay aside as were still at fair value on prices. The 2008 record high prices are not far removed from trader’s thoughts. For now, the number is neutral to demand but suggests future weeks could come in higher.
Wheat’s current production short falls on foreign port producers is long from being known. Production numbers, or lack of , won’t come to light for another month as these countries lack the sophisticated tabulation system of the U.S. what we do know is, Russia was a monster wheat exporter this past season, under cutting U.S. prices dramatically and cutting our exports sharply, especially to number one world wheat buyer Egypt, once a reliable U.S. wheat buyer. Russian wheat fields are suffering from their worst drought in 30 years. This week they announced they would trap into their meager wheat reserves, as they sold about all they had, and started moving it into their domestic market to cover needs. This certainly suggests a ban or slow down in their exports are coming.
The European Union which is made up of 27 countries is also in the grips of drought. Canada’s crop down 19% and 6 m.a. less U.S. wheat this year sets up a potentially dramatic reversal in world production and the trader trading psychology. As you know trend following funds were short a record 77 thousand contracts four weeks ago and entered this week short 37 thousand. This short covering took December wheat futures from 4.84 four weeks ago to 6.28 entering this week. On the surface, the charts look .overbought. But, with world wheat production set to take a dramatic turn around, its possible funds may buy back the remaining 37 thousand short positions. This would not mean they have turned bullish but means their no longer bearish.
Whether they turn bullish and buy long or build a long portfolio are several months away but going to a neutral portfolio could take December to 6.40 to 6.80 easily. If you buy futures use 6.00 as major support to get out of it doesn’t hold as 5.82 is next support. A close over 6.34 sets up 6.60 as next stop.
Option players wanting to control risk can buy the September 6.00 call and sell the 6.70 call for 17 cents or $850, plus commissions. You have 70 cents profit potential or $3,500 and the options don’t expire until the third Friday in august, giving more than enough time for a continuation of the short covering move yet a near term top and drop in prices will allow the option to hold value enough due to time premium to cut your risk.
Corn export sales were 614 t.m.t. for old crop year and 540 t.m.t. for new crop year delivery. With the new grain marketing year so close now beginning September 1st the trade combines old and new numbers to get a total to gauge demand. Corn’s total of 1.155 m.m.t. is a bullish export numbers in the big picture especially with Asia and china in as buyers. But, demand news is somewhat muted now as weather is 90% of our pricing influence.
Soybean exports too were bullish in the big picture with old and new crop sales of 1.115 m.m.t. with China in for 341 t.m.t. with 35% of our corn crop yet to enter pollination and 82% of our beans soon to enter the key pod setting stage, weather reports control the pricing. This past week brought a very uneven weather pattern. It wasn’t as bad as hot and dry all over but a little too much or too little of each.
The nation’s grain belt is broken into thirds. The western grain belt of Iowa and Nebraska. The eastern grain belt of Illinois, Indiana, and Ohio. Finally, the southern delta states. This week brought too much rain to wide areas of the western grain with flooding and ponding in low land areas. The eastern grain belt rains were lighter than needed while the southern delta was just hot and dry. This looks to make guesses prior Mondays 3:00 p.m. crop condition update, to be all over but I suspect were looking at lower ratings. The 6 to 10 day outlook keeps above too much above normal temperatures all over the grain belt states. The southern delta looks the driest but only account for 10% of our grain production. Southern Illinois, Indiana, and all of Missouri with light showers at best while the western grain belt and upper plains above normal moisture. It’s much the same as this week. Because of the continued high heat, were set to get another period where they call for the heat dome in the south to move in to the Midwest again, but when.
September corn as of Friday’s opening has support at 3.70 then 3.62. Buy in this area. Resistance is 3.98. A close over 3.98 and 4.08 is next resistance. A close over 4.08 sets up 4.40. November beans have first support Friday at 9.70 then 9.64. Resistance is 9.90. A close over 9.90 and 10.24 is possible. One will card in the weather news is the potential hurricane that may enter the gulf coast over the weekend. If big enough and strong enough it could push badly needed rains into the dry southern delta. With western grain belt rains for next week and some in the eastern belt this would be psychologically bearish to start the new week.
Tim Hannagan
PFGBEST Research Team
800.563.9510
thannagan@pfgbest.com
www.pfgbest.com
About the Author:
Tim Hannagan joined PFGBEST from Alaron Trading Corp., with more than 30 years of experience as a futures and options trader for retail accounts. As a Senior Grain Analyst, Mr. Hannagan has helped not only his investor clients but also media, grain producers and corporate executives wishing to sense, identify and capture the slightest moves in the grain futures and options markets. His concise and analytical research reports appear every trading day and can be accessed at www.pfgbest.com/research.
For 10 years, prior to joining Alaron, Hannagan was Vice President and Senior Market Analyst for Harvey Commodities. During that period, he refined his trading methodology and developed a centralized focus on individual trading clients. It was here that he developed and tested the technical reversal system he created to enter and exit all trades.
Mr. Hannagan is a nationally recognized expert on grain markets and his opinions frequently appear in The Wall Street Journal, Barron’s, Futures Magazine, Investor’s Business Daily and other periodicals as well as on international newswire services and online blogs and commodity news services. He also has an impressive list of broadcast appearances.
In December2007, Tim released his 2008 grains yearly outlook, leading the industry by accurately predicting the historic high price rally in grains. In December 2008, Tim released his 2009 grains yearly outlook. This was when the U. S. and world economies were in a collapse. He accurately called the low of the grain movement and predicted the sharp rallies into the spring/summer planting and growing season.
PFGBEST is among the largest non-clearing U.S. Futures Commission Merchants, with customers, affiliates and brokerage offices in more than 80 countries. The company is a leader in sustainable investing through diversified products including managed funds, futures, forex, options, full-service and discount brokerage, trader education, market research, and direct online futures trading through its BESTDirect™ platform, and numerous other platforms and applications.
Disclaimer
There is a substantial risk of loss in trading futures and options.
The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers, directors, employees and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
Wheat’s current production short falls on foreign port producers is long from being known. Production numbers, or lack of , won’t come to light for another month as these countries lack the sophisticated tabulation system of the U.S. what we do know is, Russia was a monster wheat exporter this past season, under cutting U.S. prices dramatically and cutting our exports sharply, especially to number one world wheat buyer Egypt, once a reliable U.S. wheat buyer. Russian wheat fields are suffering from their worst drought in 30 years. This week they announced they would trap into their meager wheat reserves, as they sold about all they had, and started moving it into their domestic market to cover needs. This certainly suggests a ban or slow down in their exports are coming.
The European Union which is made up of 27 countries is also in the grips of drought. Canada’s crop down 19% and 6 m.a. less U.S. wheat this year sets up a potentially dramatic reversal in world production and the trader trading psychology. As you know trend following funds were short a record 77 thousand contracts four weeks ago and entered this week short 37 thousand. This short covering took December wheat futures from 4.84 four weeks ago to 6.28 entering this week. On the surface, the charts look .overbought. But, with world wheat production set to take a dramatic turn around, its possible funds may buy back the remaining 37 thousand short positions. This would not mean they have turned bullish but means their no longer bearish.
Whether they turn bullish and buy long or build a long portfolio are several months away but going to a neutral portfolio could take December to 6.40 to 6.80 easily. If you buy futures use 6.00 as major support to get out of it doesn’t hold as 5.82 is next support. A close over 6.34 sets up 6.60 as next stop.
Option players wanting to control risk can buy the September 6.00 call and sell the 6.70 call for 17 cents or $850, plus commissions. You have 70 cents profit potential or $3,500 and the options don’t expire until the third Friday in august, giving more than enough time for a continuation of the short covering move yet a near term top and drop in prices will allow the option to hold value enough due to time premium to cut your risk.
Corn export sales were 614 t.m.t. for old crop year and 540 t.m.t. for new crop year delivery. With the new grain marketing year so close now beginning September 1st the trade combines old and new numbers to get a total to gauge demand. Corn’s total of 1.155 m.m.t. is a bullish export numbers in the big picture especially with Asia and china in as buyers. But, demand news is somewhat muted now as weather is 90% of our pricing influence.
Soybean exports too were bullish in the big picture with old and new crop sales of 1.115 m.m.t. with China in for 341 t.m.t. with 35% of our corn crop yet to enter pollination and 82% of our beans soon to enter the key pod setting stage, weather reports control the pricing. This past week brought a very uneven weather pattern. It wasn’t as bad as hot and dry all over but a little too much or too little of each.
The nation’s grain belt is broken into thirds. The western grain belt of Iowa and Nebraska. The eastern grain belt of Illinois, Indiana, and Ohio. Finally, the southern delta states. This week brought too much rain to wide areas of the western grain with flooding and ponding in low land areas. The eastern grain belt rains were lighter than needed while the southern delta was just hot and dry. This looks to make guesses prior Mondays 3:00 p.m. crop condition update, to be all over but I suspect were looking at lower ratings. The 6 to 10 day outlook keeps above too much above normal temperatures all over the grain belt states. The southern delta looks the driest but only account for 10% of our grain production. Southern Illinois, Indiana, and all of Missouri with light showers at best while the western grain belt and upper plains above normal moisture. It’s much the same as this week. Because of the continued high heat, were set to get another period where they call for the heat dome in the south to move in to the Midwest again, but when.
September corn as of Friday’s opening has support at 3.70 then 3.62. Buy in this area. Resistance is 3.98. A close over 3.98 and 4.08 is next resistance. A close over 4.08 sets up 4.40. November beans have first support Friday at 9.70 then 9.64. Resistance is 9.90. A close over 9.90 and 10.24 is possible. One will card in the weather news is the potential hurricane that may enter the gulf coast over the weekend. If big enough and strong enough it could push badly needed rains into the dry southern delta. With western grain belt rains for next week and some in the eastern belt this would be psychologically bearish to start the new week.
Tim Hannagan
PFGBEST Research Team
800.563.9510
thannagan@pfgbest.com
www.pfgbest.com
About the Author:
Tim Hannagan joined PFGBEST from Alaron Trading Corp., with more than 30 years of experience as a futures and options trader for retail accounts. As a Senior Grain Analyst, Mr. Hannagan has helped not only his investor clients but also media, grain producers and corporate executives wishing to sense, identify and capture the slightest moves in the grain futures and options markets. His concise and analytical research reports appear every trading day and can be accessed at www.pfgbest.com/research.
For 10 years, prior to joining Alaron, Hannagan was Vice President and Senior Market Analyst for Harvey Commodities. During that period, he refined his trading methodology and developed a centralized focus on individual trading clients. It was here that he developed and tested the technical reversal system he created to enter and exit all trades.
Mr. Hannagan is a nationally recognized expert on grain markets and his opinions frequently appear in The Wall Street Journal, Barron’s, Futures Magazine, Investor’s Business Daily and other periodicals as well as on international newswire services and online blogs and commodity news services. He also has an impressive list of broadcast appearances.
In December2007, Tim released his 2008 grains yearly outlook, leading the industry by accurately predicting the historic high price rally in grains. In December 2008, Tim released his 2009 grains yearly outlook. This was when the U. S. and world economies were in a collapse. He accurately called the low of the grain movement and predicted the sharp rallies into the spring/summer planting and growing season.
PFGBEST is among the largest non-clearing U.S. Futures Commission Merchants, with customers, affiliates and brokerage offices in more than 80 countries. The company is a leader in sustainable investing through diversified products including managed funds, futures, forex, options, full-service and discount brokerage, trader education, market research, and direct online futures trading through its BESTDirect™ platform, and numerous other platforms and applications.
Disclaimer
There is a substantial risk of loss in trading futures and options.
The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers, directors, employees and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
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