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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (27074)	4/8/2005 1:26:43 PM
From: NOW	Read Replies (1) \| Respond to of 116555

one could call it a cure for arthritis pain in that sense! Just because it gives you a heart attack doesn't negate the fact that it helps relieve the pain of arthritis. <G>>

To: Knighty Tin who wrote (27074)	4/8/2005 2:48:21 PM
From: mishedlo	Respond to of 116555

Hi, this is Tim Hannagan and it is Friday, April 8, 2005, and this is my weekly review. CORN: Corn started the week’s demand reports with our Monday weekly export inspection report showing 30.8 million bushels were inspected for near term export unchanged from the week prior and four week average. It should be viewed as neutral to bearish for pricing as 40 m.b. plus is needed to be bullish. Thursday’s weekly export sales report showed 664 t.t. of corn was sold last week off 43% from the week prior and total sales off 10% on the year. Demand overall remains a bearish price fundamental. Friday’s USDA monthly crop report out at 7:30 a.m. central time put our carryover stocks, or inventory expected at the start of our new marketing year September 1st at 2.215 b.b. up 160 m.b. from last month’s report and 1.257 b.b. over last September 1st. The number came in a little over estimates but when you are talking 2.2 b.b. 160 m.b. more blows off the trucks on way to the elevators. Support prices for May corn next week are 1.98 then 1.92 worst case scenario. With corn already going to seed in the midwest we should be 35% planted by April 22nd weather permitting. If 1.98 is hit basis May buy September corn futures at the market and we probably will sell a July 2.00 put which could be worth 8 cents. We will have to wait and see but after entry we will look for the big short position being held by small speculators to give way to month end short covering ahead of deliveries. BEAN: Monday began with our weekly export inspection report showing 16.6 m.b. were inspected for near term export. This was unchanged from the week prior but well under our four week average of 24 m.b. Thursday’s weekly export sales report put bean sales last week at 342 t.t. up 15% over the week prior but 30% under our four week average. Soybean sales on the year remain well over last year with world record demand for high protein vegetable oil crops but as is the case seasonally, April into May, brings on a dip in U.S. exports as Brazil’s crop comes to market allowing them to become the primary port of origin until June 1st when Brazil has sold the crop leaving the U.S. who stores grain as the main port for purchase. Friday’s U.S.D.A. crop report put our carry over stocks for the start of our new marketing year September 1st at 375 m.b. down 35 m.b. from last month’s report but 263 m.b. over last year’s September finish. It very probable that with the U.S.D.A. lowering their Brazilian estimate on production from 59 m.m.t. last month to 55 today, that they will lower it again next month as reports out of Brazil are all around 50 to 53 m.m.t. this leaves room for our carryover to be cut another 15 to 30 m.b. as Brazil looks to export less and us more. It was classic buy the rumor, sell the fact. They ran up 18 cents into the report on rumor it would be bullish and when it came in as expected they sold the fact, with 12 cent lower trade after the open. Ok, now what? We look for a pre-planting low in April to be a buyer for the long term growing season. Planting begins in earnest May 1st to not later than June 10th. Since the last two years have seen August as very hot and dry when beans are in their key pod setting stage posting big rallies each year as yields were threatened, we should expect growers to get beans planted sooner in hopes that the biggest portion of the acres hit key yield development time sooner when temperatures should be cooler and conditions wetter. I look for a pre-planting low to be in before April 22nd. May has support at 6.08 then 5.80. I do not think 5.80 will be seen but trade under 6.08 and ahead of 5.95 should have you looking to buy September futures lightly then add on, with strength in prices only. If we get the futures, we will look at selling a June 5.80 put currently at 6.4 cents. WHEAT: Monday’s first report was our weekly export inspection report showing 12.3 m.b. were inspected for near term export down from 20.5 the week prior and 22 a year ago. Thursday’s weekly export sales report put wheat sales last week at 205 t.t. down 44% from the week prior and four week average. Demand continues to remain a negative pricing factor even after a 40 cent drop. Monday’s first crop condition report of the year put our winter wheat crop now breaking dormancy at 68% in good to excellent condition versus 48% a year ago. Each Monday we will get this 3:00 p.m. report updating the quality. As the good to excellent category combined increase its price bearish and as it decreases, its price bullish. So far, we are off to a great start leaving some room for growing problems but late April and May will finalize the final crop size and its quality. When the crop was finished with harvest last June the rating was a poor 43% good to excellent. This is what led to our poor demand since. After we hit a high reflecting the smaller crop due to bad weather we then kept moving down as we had such a small inventory of high quality wheat to meet export standards. We have been a third port of origin to turn to for quality milling wheat with other ports overseas getting the bulk of business. Demand is the primary driving force of a commodity. Supply side issues are priced quickly. Wheat’s demand is determined by its quality as it’s grown for human consumption and wheat not high enough in quality to meet milling standards for breads, cereals and pasta ends up in the feed ration. Corn on the other hand has 70% of the crop going to animal feed leaving quantity more important than quality. So, its price is determined in reverse to wheat. Ok, back to current issues. Friday’s U.S.D.A. crop report put our carryover stocks at 541 m.b. off 12 m.b. from the month prior and 5 m.b. under the beginning of last year’s wheat marketing year June 1st. Now, forget those numbers and focus on weather and its impact on emerging crops. July wheat looks to push lower with support at 3.10 then 2.95. As long as weather is good and demand weak stay short July and get out on a chart reversal of 3.30 next week.