Corn, Wheat and Soybeans

Discussion in 'Commodity Futures' started by elmagd2000, Jan 23, 2007.

  1. I am currently trading grains and thought to share ideas about grains complex.

    Corn and soybeans are relatively higher ahead of Bush's speech expecting him to pay more attention to bio-fuel. Generally both of them are in typical bull trends. 400 level in March corn is a good opportunity to jump in targeting 425 area

    What do you think?
  2. I'm suspicious of any bull move where the old crop underperforms the new crop.

    Look at +Jul-Dec.

    Still, the fundamentals for corn are fabulous.
  3. Geee,

    Not to be too picky, but you posted this article, again without attribution, in the cotton thread a week ago.

    1) Attribute your stories
    2) Post links if possible
    3) Try not to post the same article in response to multiple threads.
  4. What cotton thread? :)

    Well, this is intended to be short term. Still bullish in corn
  5. Trade the Swings, trade the intraday . . . the ags are a beautiful thing to trade!! Up or down!
  6. TradGab


    A correct setting-up of news could reveal a good signal for an appropriate and profitable positioning.
    Does anybody know why Allendale (Illinois) is so brazenly bullish with corn?
  7. Allendale may have their own reasons, but it's hard not to get nervous with the supply & demand picture.

    Soybeans will have larger ending stocks than at any time going back at least 20 years. By a lot.

    Corn, on the other hand, will have the second smallest ending stocks going back 20 years, and a disappearance that's advancing at some 5% per year. We will likely have 1200 (M) bushels less than last year but will be using 500 (M) bushels more. And those numbers are based upon the USDA which occasionally makes substantial adjustments. For the 06-07 crop year, here are their ending stock estimates in each month's WASDE report going back to last September.
    1220, 996, 935, 935, 752

    In other words, the USDA is projecting roughly half as much in stocks than they were just a few months ago? The trend here isn't good.

    You also have a subsidized ethanol industry that can afford to pay $6-$7/bushel for Corn. Even if they're not selling much ethanol, they're still strongly incentivized to build plants and produce the stuff.

    On top of all of that, Export sales are racing WAY ahead of the average. On average, we sell about 50.7% of the USDA's seasonal forecast by this time of year. This year, however, we're at 60.8%. Contrast this to wheat where, as soon as the price spiked, all the buyers went away. In Corn, the price rallies 30%, and we sell MORE of it!

    So, the USDA is continually lowering its ending stocks projection; there is new, irrational, price-insensitive long-term demand; and we're exporting the stuff at dramatically faster a pace than anyone expected.

    I'm not a raging corn bull, but I need to find a reason to bet against it long term. I like the Long Soy, short Corn spread--the price ratio of corn to soy is at an extreme high. If you were a farmer, and ignoring crop rotation issues, why would you plant any soy at all if you can make dramatically more planting corn? Massive ending stocks have a way of correcting themselves. :)

    I'm not Allendale, and I'm sure they have their own reasons, but I hope that was useful.
  8. TradGab


    Your reasoning is very reasonable and so probably sounded to the funds which have been going short. But you used the right key to read the situation: "an irrational, price-insensitive long-term demand". One out of two: or it is a classic demand driven rally or it is an irrational rally, that could be a way to call a technical rally fed by funds buying and commercial selling, the never-ending story. Fundamentals and linear regression are completely off-side, but Allendale (just to mention the last I read) keep on reasoning on fundamentals to convince readers of the corn fortunes.

    New topic.
    May I quote your post to let me post a topic?
    "If you were a farmer, and ignoring crop rotation issues, why would you plant any COTTON?" (!!!)
    Cotton is the cindarella commodity of the year and long Cotton/short Corn is already in the abyss...
    Perhaps is OT, but in some way regards the substitution of Soy in our beloved soy/corn spread.
  9. [​IMG]

    FullyArticulate, I was thinking the exact same thing about long beans, short corn. If I was a farmer, I would certainly plant corn over beans if I had the choice. However, look at this chart of long nov beans / short dec corn- it seems to suggest the opposite. I'm new to reading spread charts, so I would appreciate your thoughts.
  10. I have to agree with that. I used to read every bit of news I could get my hands on and was glued to the Weather Channel. Just follow price and forget the news.
    #10     Feb 3, 2007