Corn, wheat, soybeans sparked by cold, sales

"Unknown" buyers snapping up U.S. grains

Soybeans Soybeans

Corn: Frost was the main concern of the corn market Monday. Combine this with a sale of 120,000 tonnes of new crop corn going to “unknown” in the morning. This sale of corn was on a much smaller scale than trade had rumored and was also in the wrong crop year. Trade is still trying to advertise that China bought 500 – 700K tonnes old and 1 MMT of new crop corn last week.

By itself, the sale would have been considered disappointing, but frost talk put good support back into the market. At noon, the forecast models called for freezing temps to reach as far south as the Nebraska/Kansas boarder on Sunday. Monday should see similar lows but presses it further east into the Midwest. Believe it or not, the same map even showed some 20’s in northeast Iowa and southeast Minnesota.

While corn added premium, it did not run wild. With the cold forecast for Sunday/Monday there is still plenty of time for this forecast to change multiple times over the next six to seven days. Corn is still trading with a “shoot first, ask questions later,” so look for each weather update to spark some active trading throughout the week.

Bulls should have good ground to offer support this week both from threat of cold temps as well as thoughts of huge Chinese demand. In addition, planting numbers only came in at 28% complete. The trade was looking for 31%. Be cautious to jump on this mindset as it is based on rumors and seven-day out forecasts for now. Each morning's export report and weather update should be watched closely…Ryan Ettner
Soybeans: Beans broke mostly due to money flow and European economic concerns. With the funds holding record long positions, it is easy for beans to follow money. The charts are in a sideways range and will most likely find support on further pullbacks. Exports have been a big reason for that support and will continue to help protect price as long as we continue to ship.

There was another sale of 165,000 tonnes sold to “unknown” Monday morning. China is, and will be, the biggest buyer of our beans. They are gearing up to buy an estimated 55 million tonnes of beans this year and will buy more beans in the coming year (58 million tonnes). If they give the United States its “normal” share of 47% of that, we may sell 27 million tonnes (1.0 billion bushels).

Adding that to the normal 600 million to other buyers could push new crop exports to 1.6 billion. That would be a dramatic increase over USDA’s old crop estimate of 1.290. We are still friendly new crop beans and exports will be a big reason why. Keep in mind that funds are long and could be influenced by money flow but the big picture is still bullish…Steve Georgy
Wheat:  Colder weather over the weekend, and more on the way, for this upcoming weekend gave the market a boost Monday. Temperatures over the weekend were colder than anticipated with parts of Northeastern Missouri hitting a low of 29 degrees and parts of Eastern Kansas dropping to 30 degrees. With temps this cold, there was a good chance that some damage was done to the crop. Luckily, most of the winter wheat did escape temps dropping this low, so damage should be limited.

The noon maps gave the Midwest another shot of cold weather next week. The maps were showing threat of freezing temps in the Plains down to Kansas and into the Midwest with most of Minnesota, Wisconsin and Iowa getting freezing temperatures Sunday night. On Monday the cold looks to shift east as freezing temps are seen for most of Wisconsin, Illinois, Minnesota, Indiana and Ohio. The temps could cause damage if the maps would verify. We would recommend traders not get overly bullish as we are still five days away from the when the cold is forecast to hit.

About the Author

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.

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