ALLENDALE, INC.
4506 Prime Parkway, McHenry, Illinois
800-262-7538
(March 8, 2002) CORN: Our three-year average historical study suggest an opportunity has presented itself to hedge corn at the 2400 to 2500 level. Present daily chart technicals suggest 2330 to 2340 is a huge wall. The resistance is one issue while Chinese cancellations only compound this months early fundamental disappointment. USDA lowered export projections by 50 million bushels and added them to projected ending stocks. Weekly export shipments were a marketing-year high, but sales and shipments remain weaker than year-ago levels and the demand light is turning dimmer as we leave the hardest months of winter when animal feed usage is more aggressive. That light at the end of the tunnel flickering is news released yesterday of the El Nino which could be around until early next year. However, when we look at the present U.S. Drought Monitor and compare it to the early March 2000 drought monitor map this El Nino may not have the equal punch the threat had with futures back nearly two years ago to the day.
Take a look at the U.S. Drought Monitor released today versus what the map looked like on March 7, 2000.
U.S. Drought Monitor
March 5, 2002, Valid 8 a.m. EST
Released Thursday, March 7, 2002.
Author--Douglas LeComte, NOOA/CPC.
U.S. Drought Monitor
March 7, 2000, Valid 7 a.m. EST
Released Thursday, March 9, 2000.
Technically the May futures trade was within a breath of presenting a technical rally which could have hung with the beans. We made a lower low today than anytime this week and came very close to making a higher high than anytime this week. We could have seen an outside day higher and possibly a potential reversal in the making. We were left with a lower close this week than last. We are long old-crop May calls and futures as a result of our 10-year average historical study which suggest 6 of the past 10 years, corn futures have closed higher at the end of March than where they closed at the end of February. We may have one more week in the month for a potential rally in the old crop, but could see a flattening for the balance of the month. Cash corn movement has picked up while cash soybean movement begins to back down seasonally.
Joe Victor
www.allendale-inc.com