Corn: Spread traders were active again, buying the December corn while selling the May. This is a trade that is similar to what we saw last Wednesday when these spread traders took some profit off the table. In just three more days, the USDA will be revising old crop carryout, which trade feels will once again be lowered. That means Monday's sell off will likely be seen as a fast buy for the bargain-buying speculators.
Looking back to last week again, the day following the spread profit taking led to a 15-cent bounce and May finishing on the highs of the day. With no bearish change to the corn fundamentals, it is hard to see it setting back too much right now. This March timeframe is well known for planting doubts both in condition and number of acres. Just Monday, one analyst group had suggested corn planting will be delayed from heavy spring rains, which could result in a 10 bushel per acre loss in production. This is the type of talk that is popular through the month of March.
Some are taking off 2011 production significantly before even a single bag is opened. For this reason we will have to stay on the bullish side while watching out for bearish information. Keep in mind that this does not mean we should avoid hedges. Whether you are using options, futures or stops we need to make sure they are working or thought out now. These are amazing prices that need to be protected or in the least have a plan ready to place at a moments notice. As May corn approaches 2008 highs we need to remember that an end to a bull market can occur at any time, not just on report days. Call in and participate in our acreage survey. 800-262-7538…Ryan Ettner
Soybeans: News in recent days has turned negative. Argentine dockworkers have ended their strike. This will allow the world’s number one exporter of soyoil and soymeal to get back in the game. Monday morning’s forecast also noted an extended dry pattern will be seen for northern Brazil. That will allow them to get back to harvesting. Also, for Thursday the trade is wondering how much of an increase will be seen for Brazil’s crop. As we noted on Friday’s comments, there is even one group looking for a sizable increase for Argentina…Rich Nelson
Wheat: Wheat was down hard Monday as the trade took some weather premium out of the market. The forecast is pretty much the same as it was going home on Friday. The forecast is for several good rain events to hit the driest part of the winter wheat belt the next two weeks. These rains will be important as the crop has struggled recently with the lack of moisture as it comes out of dormancy. With the tightening world stock situation, the world is counting on a good U.S. crop to replenish world stocks.
On the demand front, the market received mixed signals Monday. Export inspections came in at 21.44 million bushels which was at the low end of the trade estimates. Some traders will argue that this shows demand for U.S. wheat is slipping. I’m not sure that this has happened. Iraq purchased 400,000 mt of wheat over the weekend. Of this, the U.S. sold them 300,000 tonnes. Lebanon was also in the market over the weekend and purchased 15,000 tonnes of U.S. wheat. Morocco has purchased milling wheat but the U.S. did not get any of their business. After the trade Monday, Turkey announced that it will decrease the import tariff on wheat from 130 percent to 0 percent until May 1, 2011. This should be viewed bullish as it shows the Turkey government is trying to encourage wheat imports by making it cheaper to bring wheat into the country.
One interesting story out of China was that they claim they are holding nearly 100 million tonnes of wheat in reserves. This equals close to an average years production for them in the bin. This will take some of the fear of a China production shortfall out of the market. The real question is, does China really have that many bushels in their reserve? They seemed really nervous just a few weeks ago about the drought that was affecting this year’s crop for a country that has one extra crop in the bin. So I would be inclined to ask again, do they really have that many bushels? Only time will tell…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.