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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 (39208)	10/14/2005 11:35:38 PM
From: mishedlo	Respond to of 116555

Hi, this is Tim Hannagan. It is Friday, October 14th, and this is my weekly review- CORN- With the government closed Monday for the holiday, all weekly supply demand report began Tuesday. First, was our weekly export inspection report, which tells us how much grain was USDA inspected to be shipped and becomes a good gage of demand. With harvest ending at month’s end supply side issues become old news and demand side fundamentals become the driving force whether bullish or bearish. Tuesday’s inspections were 38.7 m.b. up from 29.9 the week prior, 35 m.b. a year ago and our four week average of 27 m.b. It is a good demand signal but much is attributed to catch up at gulf ports now up and running and a end to the Asian holiday. Tuesday’s crop condition report showed 56% of our crop is in good to excellent condition up 1% from the week prior and under last year’s record crop of 74% . Our crop progress showed 36% of the crop is now harvested versus 26 the week prior, 32 a year ago and equal and equal our five year average. Clearly farmers are slow to harvest corn allowing it to sit in fields longer to dry and save elevator drying costs. This is not a issue to effect prices as cash bid at elevators are lower due to 2.2 b.b. left over in bins from last year. Wednesday’s USDA monthly6 crop report put corn production this year at 10.857 b.b. up 218 m.b. from the September report and only 5 m.b. under our pre-report average guess. This would be the second largest crop only to last years. They put carry over stocks which is the amount of grain expected to be left over at the start of our 2006 harvest next September at 2.220 b.b. up 141 m.b. from our September report and 17 mb. Over our average pre-report guess. It is the second largest ending stocks figure since 1987. they put world ending stocks at 111.9 m.m.t. versus 126 last year due to smaller production in china at 126 last year due to smaller production in China at 126 m.m.t. versus 130 a year ago. South Africa 8 m.m.t. versus 12.4 and Argentina 18 versus 19.5 m.m.t. last year. Large domestic stocks clearly leaves us with no hope to run short but demand issues now become a more important player in pricing. Friday brought us our weekly export sales report showing 933 t.m.t. of corn was sold last week off 2% from the week prior and 27% over our four week average. Asian sales were a robust 530 t.m.t. We need sales over 1 m.m.t. to be bullish but 850 or more is certainly friendly. With over 60% of our harvest yet to come we can still push to 1.98 to 2.00 early next week but harvest lows loom closely now. I will begin to try and identify the low and begin to buy May futures and option call strategies. For those who are trading at the Revco trading firm and are concerned over recent issues and looking to move call me at 800-563-9510 or email me at thannagan@alaron.com <mailto:thannagan@alaron.com> for opening account information. We are leaders in online discount and full service trading. BEAN: Beans first report of the week was our weekly export inspection report showing 18.1 m.b. were inspected for near term export up from last week and four week average of 5 m.b. and equal a year ago. It is a positive demand signal in large due to a return of Chinese demand after their week long holiday last week. The crop condition report Tuesday put beans at 57% G-E condition up 1% on the week but under last year’s record crop of 66%. The crop progress report put beans at 60% harvested versus 36% last week, 55 a year ago and well over our five year average of 51%. In 10 days it will be done and the market sees it as psychology in. the remaining 40% will not change production levels to any big degree on our November crop report. Wednesday’s crop report put bean production at 2.967 b.b. up 111 m.b. from our September report but 39 m.b. under our average guess and the second largest crop on record. They put our carry over stocks for the sart of our 2006 harvest at 260 m.b. up 55 m.b. from the September report but 44 m.b. under the average pre-report trade guess. This was the surprise I talked about on my Tuesday report to watch for. This lower than expected 2006 ending stocks led to a 17 cent higher open on Wednesday. On world numbers they put world carryover at 47.4 m.m.t. versus 43.0 last year and pegged Brazil’s production at 60 m.m.t. up from 51 last year with Argentina 40.5 versus 39 m.m.t. well, plenty of near and long term supplies suggested but supply side fundamentals move to the side lines and demand side report become our pricing influence. Friday’s weekly export sales report showed Friday’s weekly export sales report showed 684 t.m.t. of beans were sold last week. 27% over the week prior and 7% over our four week average. Asian sales were 600 t.m.t. with China in for 517. this is a good demand signal as China buys U.S. beans in part as a hedge against uncertain Brazilian production yet to be determined in March. It is more probable than not that harvest lows are in. We had our last bearish crop report of the year, harvest is near 80% complete, demand is improving and large controlling funds have been buying back shorts. No bull market ahead but I would look to buy March beans on breaks and look for demand and any uncertainty over Brazil’s growing season through March to lend a lift to beans. WHEAT: Our week’s reports began with Tuesday’s weekly export inspection report showing 27.3 m.b. were inspected for near term export, up from 15.6 the week prior and 20 a year ago. Year to date inspections are 355 m.b. versus 418 a year ago. It is our best number since last September and we need to see this every week now to be bullish. Tuesday’s crop progress report put our hard red winter planting at 68% complete with 38% emerged from the ground. These numbers are consistent with the five year average pace. Wednesday’s crop report by the USDA put our carryover stocks to be left over at the start of our June 1st 2006 harvest at 530 m.b. down 94 m.b. from our September report and 42 m.b. under the average pre-report trade guess. World ending stocks were put at 137.4 m.m.t. versus 148.7 last year. Well, stocks continue to drop domestically and on world markets but after digesting Wednesday’s crop numbers, wheat goes back to trading demand indicators. Friday’s weekly export sales report showed 357 t.m.t. of wheat was sold last week off 25% from the week prior and 42% under our four week average. Not a good demand signal. Remember, the reason stocks are down here is because we had a poor growing season leaving the U.S., with tighter than normal high protein milling wheat stocks. What inventory of the high protein wheat needed to meet export standards is being held tightly in farmer’s hands in hopes of higher cash bids later. Their only willing to share lower quality wheat with the feeders and this is the wheat foreign millers do not want. Wheat remains fundamentally weak but a close over 3.52 could take us on a short covering rally to 3.68 quickly.