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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: regli who wrote (35302)	8/12/2005 7:44:41 PM
From: mishedlo	Read Replies (1) of 116555

Hi, this is Tim Hannagan and it is Friday, August 12th, and the markets are closed- *NOTE: I WILL BE OUT OF MY OFFICE ALL NEXT WEEK ON A CROP TOUR THROUGH THE MIDWEST* C o r n: Today’s USDA crop production report estimated this year’s crop at 10.350 b.b. down 1.457 b.b. from last year’s crop, 435 m.b. under the July report but 95 m.b. over the average pre-report trade guess. Our ending stocks for the start of this year’s harvest was put at 2.111 b.b. versus 985 m.b. last year. Next year’s stocks are pegged at 1.900 b.b. no shortages expected. Corn pushed 6 cents lower on the open and sets the market up to see September test 2.12 next week. Remember even though drought cut production significantly, the cut came off record production numbers from last year. With good rains called for this weekend and again next week by Thursday we should start the week off lower. If December corn pushes to 2.20 next week consider buying a December 2.30 call. It should be around 8 cents or 400 dollars. Hold it into the September 12th USDA crop report where we may see a much more bullish report as true drought problems surface. The August report is always conservative. W h e a t: Our USDA crop report put all wheat production at 2.167 up 9 m.b. from last year. The breakdown reads like this: winter wheat 1.521 b.b. versus 1.499 last year. Spring wheat 553 m.b. versus 569. durum 93 m.b. versus 90. Hard red winter 913.3, soft red winter 320 and white wheat 287.6 this was a yawner of a wheat report. Ending stocks for next year’s June 1st harvest time were put at 634 m.b. up from 540 this past crop year but was under estimates by 66 m.b. Nothing in the report can offset the bearishness of supply side harvest glut and weak demand leaving wheat off 4 to 6 on the open. Rain should slow spring wheat harvest next week. Support on December wheat lies at 3.30 then 3.22 You can consider buying off 3.22 as commercial interest should begin to enter, or wait for a close over 3.50. the market remains bearish. B e a n: The USDA crop report pegged this year’s production at 2.791 b.b. down 350 m.b. from last year’s record crop and only 11 m.b. under pre-report trade guesses. This had beans open 5 cents lower. They put ending stocks for this September of 300 m.b. versus 110 last year but we rallied to up 12 cents at mid session as traders focused on next year’s projected ending stocks figure at 180 m.b, the fourth lowest since 1983. It was last year in July when beans hit 10.00 while traders talked of a record crop because our ending stocks were at 110 m.b. bottom of the barrel. But we softened again late as rain and weather concerns moved to the forefront. One thing is certain as we head into next year’s planting, we will expect a very nervous market as this year’s lower production and record world demand for beans leave us one drought away from running out. Now, near term. Wxrisk.com sees 1 to 3 inches of rain over 75% coverage Saturday and Sunday over the midwest, then more rain next Thursday through Saturday. Come Monday, traders will say what crop report and refocus on weather as we continue to grown bean pods into months end. If next week’s rains happens November beans could pull back to 6.20 to 6.25 which would be a good buying point to hold into our September 12th crop report which many think could show true damage of this year’s drought. You need a close over 6.76 to turn bullish on the charts.

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