Corn: Leftover selling from the previous trading day was seen early Monday, which may have been expected, but late selling came as a surprise.
We were finally given the analysts’ average estimate of planted acreage. That estimate came in at 91.839 million acres. Now we have the number that the trade will base Thursday’s move on. This number is 3.647 million acres more than last year and 161,000 acres fewer than the February number the USDA had given us. Some selling may have been found due to Monday's estimate being raised slightly from estimates last week.
When larger selling came in later, its impact reached across corn, wheat and cattle. Buying that came into this market on Thursday started in those same markets and was attributed to funds. Does this mean that funds sold some of what they had bought last week? In general, funds still trade in trends where they buy or sell for long periods of time and do not chop the markets back and forth violently. Given today’s low volume of only 128,000 May contracts traded, this market may have been subject to only a few sell stops being hit with little support.
Most are deciding to wait for the report numbers before getting too active in this market which would allow sell stops at last week’s lows to move this market more than it normally would. On the first reaction, if few fundamental reasons can be given for the size of the setback Monday, it would be expected to find a quick bounce from bargain buyers Tuesday. True concern would surface more tomorrow if the slide continues going right into a major report…Ryan Ettner
Soybeans: Beans fell 9 cents Monday as traders are moving to the sidelines ahead of the end of the month, the end of the quarter, and the USDA report. The volatility should stay high over the next few days and it will give you an opportunity to get calls on for re-ownership as well as get some hedges done on rallies…Steve Georgy
Wheat: Wheat came under spillover pressure Monday as a hard down day in the corn markets pressured the wheat all day long. Trade volume was one of the lightest days of the year so far. According to Reuters data, total wheat volume was only 58,000 contracts. The trade was disappointing for the bulls as we did have some supportive information.
Over the weekend, Iraq purchased 300,000 tonnes of wheat. The U.S. received 200,000 tonnes of the sale and Australia sold the other 100,000 tonnes. In other surprising news, it is being reported that China will sell feed wheat out of the state reserves to offset its tight corn supply.
The weather is also being viewed as bullish to the market. The hard red wheat belt continues to miss out on the precipitation. The current forecast has limited precipitation for this area of the country for the next 10 days. The other side of the weather story is the spring wheat belt. The trade estimates for Thursday’s acreage report show that the trade is estimating that spring wheat acres will increase by 30,000 acres this year compared to last year. Allendale estimates that spring wheat acreage will actually be down by 131,000 acres. With the large snow pack in Minnesota, Wisconsin, and the Dakota’s a wet cool spring could have an impact on how many spring wheat acres actually get planted…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.