Don't make choices because you fear people.
Make choices because you trust God.

More research firms are raising the expectations on corn acreage to the point where 95 million corn acres becomes a "in the market number".  Allendale Inc., a research and brokerage firm in McHenry, Ill., on Friday estimated US soy plantings of 74.495 million acres based on a survey of farmers, less than the 75 million projected last month by the USDA. Allendale also forecast corn plantings of 95.012 million acres, above the 94 million predicted by the USDA, which will update its estimates on March 30 with results from its own survey.

China's corn imports in the 2012-2013 marketing year beginning Oct. 1 may rise to 8.9mmt from estimated 6.6mmt this year, researcher Shanghai JC Intelligence Co. said today. The USDA's estimate for 2011/12 Chinese corn imports is 4mmt. A report Friday from RJO's Powerline Group, citing work from AgTraderTalk, noted the near-record spread between US/Chinese corn futures that many believe will trigger increased Chinese corn imports in the months ahead and may support a rise in US corn prices soon. The Chinese corn price differential to US corn is at levels that have encouraged strong imports in the past. Look for US corn to start to gain on the Chinese corn price as July corn could gain as much as $.75 per bushel before the end of June and push the Chinese/US corn price spread back to $3.00 per bushel.

There are still many number crunching analysts that disagree with the USDA's ability to calculate what the current corn stocks number is. I think Bill Gary of CIS has a very well written piece that spells out the case for 7.50 plus corn again. CIS, Inc. stated that utilizing government statistics to determine the potential tightness in supply/demand has become nearly useless. During 2009-10, the USDA showed feed usage declined 232 million bushels from the previous year in one quarter, then reported it increased 326 million in the following quarter. In 2010-11, they reported feed use expanded 218 million in one quarter, followed by a mammoth contraction of 557 million in the following quarter. Mistakes of this magnitude are unacceptable in accurate forecasting of price. The "real" indicator of supply tightness is cash market prices. With cash markets trading 30 cents or more above futures, they have become a more accurate measure of supply tightness than USDA statistics. Last year, the March corn stocks report was about 300 million bushels below analyst's projections. However, the USDA reported June stocks about 300 million above analyst's figures. In September, the USDA's stocks number remained about 300 million above calculated data. December's stocks were reported about 250 million above expectations, but production increased nearly 100 million. This compounded the unexplainable "finding of stocks" to nearly 350 million bushels. Because of these huge discrepancies, we again warn subscribers . . . Beware the upcoming March 30 corn stocks report.

Our March stocks estimate of 6184 million bushels would be a sizeable 339 million below last year and the lowest since 2007. If usage during the March-August period were equal to last year, ending stocks would calculate to be 774 million, the lowest in 16 years. Last year, July futures advanced to$8.00 per bushel to ration demand and avoid critical shortage. With an even tighter supply/demand balance this year, there is little doubt prices will be required to ration demand once again in months ahead. Following the financial crash of 2009-10, the USDA began reporting highly inconsistent feed/residual usage figures. During 2009-10, usage fell 232 million below the previous year in December-February, and then increased 326 million the next quarter. In 2010-11, usage increased 218 million in December-February, but fell 557 million during March-May. In other words, it appears the USDA corrects the mistake made in the previous quarter by adjusting the next quarter. If the pattern holds, the decline of 244 million in the September-November quarter would be followed by a significant increase in the December-February quarter. Based on this pattern, it would not be surprising if March 1 stocks fall 150 million bushels or more below expectations. We continue to expect July futures to trade near, or above, $7.50 if our suspicions over USDA stocks reports are confirmed.

After crop problems in Russia and the US in 2010/11, and in the US and South America in 2011/12, could it be Europe's turn next? EU wheat futures were slightly lower early this morning on increasing seasonal pressure, but dry weather on the Iberian Peninsula and some North African countries is being carefully watched. Temperatures will average higher than normal across all of Europe until June, with the exception of the U.K., Iberia and southern parts of the continent in April, Weather Services International said Monday. Such weather could cause concern for the region's wheat crops, which are already suffering from continued dry conditions. WSI said a lack of North Atlantic "blocking," an atmospheric phenomenon that affects weather patterns, will likely result in warmer temperatures and reverse the prevailing trend experienced since 2008. Europe's wheat crops face a worrisome weather outlook, with the prospect of drought coming after severe cold weather in January and February. Dry, warm conditions in the wheat areas of the U.K., France, Italy and Spain are causing concern, with many analysts beginning to lower their expectations for the region's 2012-2013 harvests.

US Dollar Weekly Chart    

May corn has been contained by the 672-675 resistance we have shown many times over the past weeks and a correction from there is not a surprise. Today's outside lower close in corn futures will have many screaming "TOP,TOP", but the robot-trades done in the past two years have put outside moves into a more common appearance as of late with their significance being muted.

December corn continues to climb in spite of all the negative rhetoric over how many acres we are going to plant. A Head and Shoulders bottom seems to be confirming itself on the December contract with quite the base being formed. Could it be the Chinese are buying up new crop futures? Maybe or a concern for a warmer and dryer summer could be in play to.

 Spot soybeans are getting very close to significant resistance at $13.90-14.00. The easy ride may be temporarily coming to a stall and a volatile trade could present itself till after the USDA report. 1335-1340 is major support here if this market stumbled hard.
 

May Bean Daily Chart

Wheat

   September MPLS Wheat Daily Chart

  April Live Cattle Daily Chart

August Feeder Cattle Daily Chart

March Feeder Cattle Daily Chart

Gold is in trouble for further decline. 1685 is resistance with 1700-1705 being major resistance now.

Gold Intra-day Chart

 

(repeat) Crude oil is trading inside of the crowd noise. What I mean by that is until it closes under 103.00 or above 110.00, the grinding action is noise. Buy support in the 103.-104.00 area and get out if we have two closes below that. 

                                                         May Crude Oil Daily Chart

03-19-12

» Hedge Recommendations

Corn: 2011 production 1-24-12 Sold 20% @ 634 March. 1-11-12 sold 20 % at 653 March. 8-24-11 sold 20% at 7.42 December.  3-30-11 sold 20% at 608 March 1012  ---------------------------------------------------------------------------------------------   Soybeans: 2011 production 1-24-12  Sold 20% @ 1225 March. 1-11-12 Sold 20% at 1207 March. 3-19-11 Sold 20% of 2011 beans at 1350 on the November 2011 contract. 10-14-11 Sold 20% of 2011 production at 1281 on the Jan. 2012 contract.   ------------------------------------------------------------------------------------------------      HRS Wheat:   2011 production 2-28-12 Cashed a 22 cent profit in on a 40% futures sale to be added to a cash sale. 2- 1-12 Sold 20% of 2011 crop on the May contract at 828 1-11-12 Sold 20% on the board at 816 March with basis not locked. 8-24-11 sold 20% at 931 December. 3-29-11 Sold 20% at 910 on the Dec 2011 HRS contract.  For winter wheat producers sold the Sept KC wheat at 883. ------------------------------------------------------------------------------   Cattle      For January, March, April, and May Feeder Cattle...Covered 100% of production buying puts and selling calls. Covered the calls in the December break near $1.00 for most.   NOTE: With the exception of livestock, all trades will be entered in the electronic markets unless otherwise noted. Hedge recommendations and Trade recommendations are totally separate, and may sometimes conflict with one another. It is strongly suggested that Spec trades and Hedge trades be done in separate accounts.   Heartland Advantage Ask about our State-of-the-art order entry software with LIVE quotes and charts! Free to all active clients of Heartland Investor Capital Management, Inc. A word to the Wise                             Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable to Heartland Investor Capital Management , Inc. but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK of LOSS involved in trading futures and / or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL . NO LIABILITY  on the part of the author exists for any trading loss you may incur in the use of this information. The information contained in this newsletter is privileged, confidential and protected from disclosure. Any further disclosure or use, distribution, dissemination or copying of this message or any attachment is strictly prohibited. Newsletter provided by Heartland Investor Capital Management, Inc. a registered CTA with the NFA, of which Eugene Graner is principal. This entity is a separate legal entity from the Introducing Broker Heartland Investor Services.

www.heartlandinvest.com |

Copyright © 2012 Heartland Investor Capital Management All rights reserved