Corn: Buying from smaller speculators was back again on Monday. First off, they waited for the first hour to see if more fund selling was going to show up. Then after the first hour of trade passed and the funds were not heard from, buying quickly moved into this market. These smaller speculators know what they are doing by waiting that first hour. Give the larger funds an hour to sell, and if they don’t then it is safer to slowly move in as they did.
For now, an educated guess would be that funds will be here Tuesday. If funds do not come in, there is good reason to expect a turnaround. This does not mean corn is looking to head back down quickly. There are still plenty of fundamental facts supporting this market right now…Ryan Ettner
Soybeans: Beans were not able to follow the corn and wheat higher. We are still seeing the market find pressure due to South America’s harvest and the lack of exports in the last few weeks. China was a big reason we pushed to 2-1/2 year highs, but they are now securing purchases with South America. There is still talk another cargo or two of pre-ordered U.S. soybeans may be canceled.
We think this market is still going to get some strength from the outside markets but could see the largest setback on breaks. The trend is still up and we will continue to look at the long side while cautious of profit taking. Soybeans should stay volatile while the world continues to focus on the geopolitical tensions emerging across the Middle East and North Africa.
The bulls are continuing to look at the long side due to tight ending stocks. The volatility should remain around these markets so continue to watch your support and resistance points…Steve Georgy
Wheat: Wheat rallied on export demand, strength of the corn market and thoughts that with the turn of the calendar to March new money will show up on Tuesday. The past few months, the markets did see new investment money move into commodities the first trading day of the month. If that money does show up, it should show in the first half hour of trade tomorrow. After seeing money flow out of the grain sector early last week, the bulls would like to see some money come back in.
Over the weekend, Saudi Arabia completed the purchase of 275,000 tonnes of wheat. The U.S. provided 220,000 of the sale and Brazil got the rest. This just confirms our thought that the world buyers will be aggressive in trying to lock up needs in attempts to control food inflation. Jordan, Bangladesh, Morocco and Iraq are all in for various amounts of wheat the next few days.
Weather patterns are starting to diverge and that should start to show up in the market. The soft winter crop is starting to receive much need rain while the Hard Red Wheat belt continues to miss the rains. The spring wheat belt continues to deal with a large snow pack that could causes delayed planting problem due to potential flooding. This weather pattern would be bullish to the KC wheat and Minneapolis wheat contracts and bearish the Chicago contracts if it stays this way…Jim McCormick
Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Steve Georgy is a Sr. Broker/Manager at Allendale, Inc. Jim McCormick is a Sr. Broker at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.