Corn: There were two main factors pulling on corn today. With the bailout of Greece in place, the U.S. dollar fell hard, lending outside market support to the corn. Attempting to pull corn lower was the talk of how many planters were out and running today. Even areas as far north as Minnesota were rumored to have a few planters rolling over the weekend.
Right now the forecast continues to look free of rain for the most part with the next system expected possibly on the weekend. For this afternoon’s planting progress number, trade is looking for between 5% and 7%. Should this weather hold together, we already have the early expectations of a sizeable bounce in that planting number for next week. Rains were reduced slightly in the Midwest for this weekend and increased in the Delta and Southeast. This was a nearly ideal change seen at noon today.
A bounce in corn is most likely to come from continued weakening in the dollar. Fund buying is still the factor, which could lead to the largest gains but that group just hasn’t been active for quite some time. Other than an occasional round of one-day buying, trading funds have not offered the expected support. It is not to say they can’t step in at any time with large support but it has gotten to the point where making sales are easier to do when they stay on the sidelines. In all, corn was hard pressed to move very far either higher or lower and that is the extended outlook for this week.
Barring any major weather changes, a good planting pace makes it hard to buy at these levels and the early calendar date makes it a tough one to sell…Ryan Ettner
Soybeans: Greece was offered 45 billion Euros from the EU, 30 billion in a 3 year note, and 15 from the IMF. This bailout caused the dollar to collapse 100 points from Friday’s close and was supportive to all commodities.
Additionally, China bought 120,000 tonnes of old crop U.S. beans, sparking rumors that China was showing Argentina they can do without their soybean supply and that the trade dispute can continue as long as Argentina wants. However, cash related brokers suggested this sale was placed on U.S. books but will be switched to Argentina. Time will tell on this story. Argentina has more than just Chinese disputes to deal with. There are rumors of shippers and farmer strikes that are imminent. As long as these problems exist, the bull has something to hold on to.
Aside from all these rumors, the reality is that stocks are 190 million bushels (not a shortage) and will likely build to 320 million bushels next year (pretty darn bearish). World stocks are in record supply (even more bearish). Based on supply-demand valuations, cash beans belong in the $8.00 area. Funds were long 23,000 contracts and added another 6,000 today. They are the only group buying this market.
Monthly charts show solid support at 917 and resistance at 980 and 994. Daily charts show resistance at 965. Spreads were strong as fund traders bought back May-Nov spreads after Friday’s report failed to reflect the higher quarterly stocks estimate. The reality is that if spreads firm much more, there could be large deliveries against May futures…Bill Biedermann
Wheat: Psychologically, wheat futures were able to find support from the chart gap lower in the US dollar. Wheat futures find support as Saudi Arabia was able to secure June-Oct arrival 20.21 million bushels and weekly US export inspections of 17.09 million bushels.
Seasonals, although anticipated higher, are expected to be capped with larger than usual domestic and world ending stocks. Before Allendale can come out of its bearish mode, we need to see two closes above downtrend resistance as shown within the Allendale Advanced Charts.
Weekly conditions were left unchanged in the combined good to excellent category but did experience a shift of 1% out of excellent into the good category and is likely to be supportive to price. It is estimated by days end, traders bought 5,000 contracts of wheat…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.