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| UPDATE FROM THE CORN BELT ("C&S Weekly Insights 24-06") - Jun. 11, 2006 |
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Introduction
On April 23, 2006, we first posted work of William C. Fordham, head of C&S Grain Market Consulting. C&S is located in the heart of the nation's Corn Belt in Ohio, Illinois, and the material was very well received. Additional general background information is available at "Thoughts For Week 17."
Effective April 29th, Bill changed both name and format of his weekly newsletter from "Thoughts" to "C&S Weekly Insights." Following are the first 10 of the 28 observations contained in the latest edition ("C&S Weekly Insights 24-06"). The balance of the current week's material can be accessed on the home page of Bill's website, link provided below. It is formatted in Microsoft Word. --Doug Gillespie
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FROM THE LATEST EDITION OF "C&S WEEKLY INSIGHTS":
01. June is here but it feels like March today. Cold and wet, not my favorite!
02. I am wet on the outside but dry on the inside today. To many random thoughts racing around between my head and my heart to put into words.
03. Therefore, this week's Insights are going to be very brief.
04. The markets are correcting. CZ and SX are seeking their Spring Lows.
05. We need to reset our expectations about the size of corrections in the Futures markets as time unfolds. The volatility of the Seventies will return.
06. On June 6, 1973, one day after the all time High in Soybeans at 12.90, July Soybeans had a High of 11.90, a Low of 10.10, and a Close of 10.15. This resulted in a trading range of 180 cents, which was 17.73% of the Daily Closing price. Hang on, as we haven't seen anything yet.
07. There is about 342 weeks until the end of 2012. Between now and then, just about everything that can possibly happen in terms of high prices and excruciating declines will probably occur. Get used to it!
08. This week's Energy Watch shows the U.S. using 20.951 Million Barrels Per Day (MB/D) versus 20.100 last week, versus 20.178 a year ago. (Each week these are 4-week averages.) The average retail price for Regular Gasoline is up 36.7% over a year ago, 289.2 this week versus 286.7 last week, versus 211.6 last year, according to the Weekly Petroleum Status Report. Including the Strategic Petroleum Reserve (SPR), we now have 82.0 days of energy stocks on hand versus 85.5 days a year ago, assuming no new production or imports. The U.S. imported 62.93% of its energy needs last week versus 60.25% a week ago, versus 60.01% a year ago. Refinery capacity is at 90.5% versus 90.3% last week versus 94.2% a year ago.
09. Total energy used last week was 3.8% greater than last year. In spite of higher Crude Oil stocks than a year ago, total energy supplies on hand are less than a year ago in terms of days of use, 82.0 days versus 85.5 days a year ago. I think that is more important than the actual stocks numbers.
10. The last time the Corn markets experienced a transitional change in use was in the 1972-1975-export boom era. We may be entering into a new era where fuel rather than exports will become the driving force. In the 1970's, December Corn Futures (CZ) prices went from a Low of 112.25 in 1971 to a High of 400.00 in 1974, a 256% increase. Could it happen again? YES!
For the balance of this week's material, go to C&S Grain Market Consulting
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