Corn: It was the start of a new week and once again corn started with a bullish kick. That makes six straight weeks with a bullish start. On Monday, the corn market had support from disappointing Argentina rain talk along with outside markets. There was certainly a feeling that most analysts were turning to the bull side of the camp once again. There is quite a difference between how March corn has traded compared to December. Nearby March is quick to react higher due to weather talk while December can only be described as sideways. Mexico came in with a purchase of 152,900 tonnes of corn Monday morning to help offer support as well.
Nearby corn will need even more export announcements to continue this recent bounce. Exports should continue to be considered support rather than fuel for a bounce unless exports stay at a strong pace at higher prices. A key area would be to see new exports announced with March priced over 620. That is the area March corn was at during the last bounce when exports fell back down to dismal levels. Beans are helping to pull March corn higher while December continues to look at potential large US production numbers keeping the new crop subdued.
Look for some more big news out of Europe to move this dollar around which will also affect corn. Just looking at the dollar chart would suggest that it has turned but we all know that dollar is only one bad European story away from turning back up again. Bulls are hoping for more bean strength as well as more positive European news. Bears will look for profit taking tomorrow and will continue to point out the oppressive Jan crop report numbers to keep corn from bouncing too much…Ryan Ettner
Soybeans: Beans closed strong as traders continue to worry about the lack of rain in South America. The forecast suggests more rain over the next few days but the concern is that they are missing the major growing areas. The rain systems are pushing South but the next 24 hours could still see good rain across the dry areas. There were also reports out of Brazil that a local advisory firm, AgRural, dropped their forecast again for beans down to 70.2 million tonnes. This is a decrease from 73.1 mt on the last revision. Brazil’s record production last year was 75.3. Due to the lack of rain we are seeing a significant decrease in expectations from most advisory services. USDA is still plugging in a 74.0 crop out of Brazil.
As we mentioned at our outlook conference, over the weekend, beans are entering a crucial time period but if we get rains over the next few weeks beans have a good change at seeing good yields. Beans are in the flowering stage right now and will be entering pod fill over the next few weeks. To put this in perspective, it is like our July/August time frame right now. We have talked about South American production and some of the impacts, but what about the United States? We are looking at a 243 million bushel increase in production. We feel this increase will come from increased acres as well as increased yield…Steve Georgy
Wheat: Wheat rallied for a third consecutive day on Monday as the outside markets and technical picture looked a little friendly today. News out of Europe that Greece might have come up with a deal with its creditors on a debt swap deal had the Euro currency rallying. This pushed the U.S. dollar to a three-week low. A weaker dollar makes our exports more competitive on the world market. Recent newswire reports are touting that the U.S. wheat export market is becoming competitive with other exporters around the world. A weaker dollar will only add to our competitiveness.
The other grain markets traded higher on continued weather fears in South America. With these markets trading higher they gave the wheat pit some spillover support.
On the technical side the March contract took out the 50-day moving average on Monday and that added to the positive tone to today’s market. As for price outlooks, without bullish outside support the record world stocks will weigh on the market. For this reason Allendale does not recommend getting too bullish; with abundant supplies of wheat in the world, rallies look like they will be sold at this time…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 Senior Broker/Manager at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.