Corn: Funds were active once again buying the corn market on Monday. It was questioned if Friday’s buying was going to be carried over into this week or not; it appears that question has been answered. Even though one fund was known to be selling some positions out of beans today, it did not stop the moderate-sized corn buying. It could be said that weakness in beans slowed what might have been an otherwise larger run up, but there is little doubt buying was here.
Looking at this market technically, it is overbought and due for a setback. Add in the fact there still has not been a correction from the bearish USDA numbers seen on Friday and it supports thoughts that a short term correction is due and that correction could mean the May contract setting back to first support of 744 1/4.
This does not mean we should be turning bearish, though. As soon as this market saw the USDA numbers on Friday, there were newswires suggesting that May could still see 800. Obviously, there are plenty of speculative bulls left in this market. Looking at the weather forecast suggests similar to what thoughts were last week and that is a call for good planting progress to be made until late week.
Starting Thursday and lasting through early next week is a large scale change to cool and wet from the generally good conditions we are seeing right now. Early talk suggests that southern planting areas are ahead of pace, starting even earlier than last year. Northern areas will have to wait through this wet and cool period which suggests rain and very slow drying due to the cool temps. There is no doubt that old crop has plenty of speculative support while the new crop moves slowly…Ryan Ettner
Soybeans: Beans fell hard shortly after the open Monday and finished 23 3/4 cents lower on the day. Most of the newswires were talking about a possible reduction of exports to China. This started the selling as South America’s potential bumper crop had traders stay on the short side. The 1360 area should be good support Tuesday, but a violation of that could take you back to the 1340 area quickly.
There was also talk that a larger index fund was liquidating a basket spread and beans were part of the group they were selling. They were long crude, beans, and palladium as a collective group and they were taking profits.
We are still friendly grains but we don’t want to rule out a potential pull back near 1300 again if this selling continues. Fundamental news is light but keep an eye on crude and the dollar in the short term…Steve Georgy
Wheat: High protein, Minneapolis wheat and Kansas City wheat contracts came under pressure Monday, but the Chicago market was supported as spread trader’s unwound positions. The KC and Minneapolis contracts had been supported on weather concerns and the Chicago market was sold against these contracts as a way to reduce risk.
Our lead forecaster, Drew Learner, is suggesting that with the cold weather moving into the plains by the end of the week combined with an active jet stream pattern will produce the best chance for rain to hit the dry plains in sometime. If the rain were to materialize, it would fall this weekend and then possibly again later next week. With the predicted rain not expected to fall until next weekend, the trade will be watching the map to see if the rain will materialize.
As for the weather affecting the spring wheat belt, reports out of Fargo ND are that the Red River is about to crest and this is leading to hopes that this part of the country will finally dry out. Any additional precipitation that this part of the country gets will hinder the drying process so the weather maps will need to be watched closely…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.