Prospective plantings for 2011 are in. What’s next for corn, soybeans and wheat?

As far as the COT legacy report below, you see Commercials in corn -304,923 contracts net-short. This number is made up of the Producers (true commercials) at -558,759 contracts net-short and the Swap Dealers 253,836 net-long. In soybeans, Commercials are -135,727 net-short. On the weekly chart below, we find Producers -237,515 contracts net-short and Swap Dealers 101,788 net-long. Finally, in wheat, Commercials are 6,854 contracts net-long. More importantly, in the disaggregated report we see Producers -169,526 net-short and Swap Dealers 176,380 net-long.

Moving forward, we will need to watch how plantings go. If there are setbacks in plantings, I am sure we will see new highs in all of these grains, including soybeans. Right now all eyes will be on corn as it is the first to be planted. Every Monday there is a crop progress report released that will allow us to monitor plantings. At Trends in Futures, every Tuesday I will be analyzing this report to see how it could affect prices and posting it on Twitter. Of course after plantings are complete, then we will need to watch the weather. Have a prosperous trading week.

Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

If you need help understanding how to understand how to use the COT report to your benefit, please email me at Gary@crbtrader.com and put COT report in the subject line. Please include your name and telephone number in the email.

Proceed to Page 3 for this week's detailed fundementals charts...

Corn fundamental outlook — Bullish — Corn prices have been in correction mode, but gapped higher on Thursday on the bullish USDA reports that virtually assure continued tight supplies. The longer-term trend remains bullish on fears of delayed plantings because of flooding, the USDA’s prediction that U.S. corn supplies may be restricted for at least the next year or two and the USDA’s cut in its quarterly U.S. corn stockpiles as of March 1 to 6.523 billion bu, a four-year low. The corn stocks/use ratios are extremely tight with the U.S. stocks/use ratio of 5.0% matching the seven-decade low posted in 1995-96 and the world stocks/use ratio at 14.7%.

Soybeans fundamental outlook — Bullish — New crop soybean prices moved to new highs after the March 31 USDA report showed a 1% drop in Spring and the likelihood for an even tighter soybean supply situation. The other major bullish factor is strong Chinese demand. The U.S. stocks/use ratio is tight at 4.2%, while the world stocks/use ratio is near average at 22.7%.

Wheat fundamental outlook — Bull market correction — Wheat prices are in correction mode on the prospects for an increase in global output this year and the USDA’s hike in its U.S. and global wheat carry-over estimates.

Prices had surged to a 2-1/2 year high on strong foreign demand for U.S. wheat because of scant European and Russian supplies, and quality issues for Canadian and Australian supplies because of flooding. Increased U.S. winter wheat plantings are a near-term negative, but adverse weather in the United States, China and Australia and a lack of Russian exports is supportive. The U.S. wheat supply situation remains above average with the U.S. stocks-to-use ratio at 34.3%, but the global stocks-to-use ratio of 27.4% is tighter and is near the decade average.

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