Corn: Starting off the planting season, it is hard pressed to find bullish numbers, at least for the short term. One of the reports that is back in the mix is the planting progress each Monday. Today’s report did not have any corn planting numbers. There is a chance next week’s will. We could find troubles, making that number bullish this year. One problem is that the number is constantly compared to the 5 year average. The last three years have had slow progress. That will draw down the 5 year average making even a moderate pace look neutral to bearish this year. Ethanol prices continue to decline even while crude moves higher making the relation to crude not as direct as it has recently been. Corn also sees a stocks report this Friday which is currently expected to bring in a slightly bearish number as well. As for today, trade was looking for the possibility of the new quarter to bring in new fund money buying. Each ingredient needed for that buying was put in place today. Crude oil was making new contract highs and the dollar was trading lower. Add in the fact there are two threats of rain, one over the next couple days and another over the weekend, that each has large coverage area with moderate to heavy amounts of rain. All of this together caused no reaction from spec traders today. This was seen as nothing short of disappointing. With other fundamental numbers looking bearish, it would be new fund buying that could spark a run higher and they just were not here. Total volume on front month corn today was just shy of 59,000 contracts. A moderate day of trading can be considered around 80,000 showing just how little trading interest there was in corn today. This morning, trading funds corn position was estimated to be near flat. It has been some time since their position has been that calm in a spring planting market. A near term bounce of December corn beyond 400 will require fund buying to outweigh a current bearish outlook. All signals that are watched for that buying were in place yet it still didn’t occur. For that reason, we will not be counting on that buying and trade accordingly -- Ryan Ettner
Soybeans: An improvement in employment combined with a decline in savings and an increase in consumer spending caused hopes for inflation-based hedge fund buying. Long only index fund buying was also anticipated as we start the new month and new quarter. However, fund buying failed to show up today and as a result the market fell on its’ own weight. Tillage work has gotten off to an early start similar to 2006 and 2007. Although it is too early to plant beans, the soil temps are already reaching acceptable levels. Without a weather threat, traders are faced with the fundamental reality that on Friday, USDA will revise ending stocks to 215 million bushels versus 190 last month. This is bearish. Additionally, if we get the 78.09 million acres planted, as intended, then we are looking at 333 million bushel new crop ending stocks. World stocks are huge and if there is no short term weather problem or short term shortage in the US, the bean market has lost its luster. We realize that seasonally the market has potential to move higher in the next 8 weeks if adverse weather develops. But as long as weather prospects look average to above average, we will only buy against cautious level and will be more aggressive trying to get short -- Bill Biedermann
Wheat: It is interesting to note that MGEX and KCBT wheat finished the day higher, while the CBOT wheat lower after the 3 day weekend. It is also important to note how the majority of the foreign markets were closed on Easter Monday but not the US markets. NASS released the first cumulative 2010 report for wheat conditions today. The CBOT floor trade was anticipating a bearish wheat condition report. The five year average from dormancy to growing has been for a 1% increase which would have suggested 64% good to excellent. A year earlier there was a 23% drop to a beginning 2009 good to excellent level of 43%. The official NASS report released at 3 pm central time suggested good to excellent conditions for wheat at 65% which was in line with the trader sentiment but clearly above the five year average of 53%. This is the highest rating for winter wheat for this week in five years. Look for higher trade on Tuesday in a weak form of short covering. Present new crop values of “other spring wheat” are less than economically gratifying to plant and may find sunflowers, canola and or edible beans as a better choice -- Joe Victor
Bill Biedermann is Sr. Vice President at Allendale. Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Joe Victor is Vice President at Allendale. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.
