Grain bulls blasted by improving new-crop production

Grain & Oilseeds Report

Corn bin Corn bin

Corn: December corn took out 547 chart support on Monday. There were plenty of bargain buyers to bring it up from the lows, but the next chart support is now 520-1/2 with next solid support at 511. Right now, the chart has opened the door lower, and it will be up to the weather to see if December walks through that door.

We are a long way from planting, but it can’t be argued that conditions are improving with each weather system that passes through the dry areas. To put things in perspective, the USDA is calling for trendline yields, which the agency has worked out to a $4.80 price. Trade doesn’t believe that yet, but each rain pushes corn a little lower with Monday spending most of the day around $5.50.

We will look for old crop to keep finding buyers from the squeeze, while new crop keeps pressure from a rain filled forecast…Ryan Ettner
Soybeans: Friday, the USDA will be releasing the March supply demand estimates. Allendale expects a slight increase in exports to be reflected this month. Argentina soybean production is estimated at 51.5 million tonnes (USDA 53 mt) and Brazil is at 83.5 mt (USDA latest 83.5 mt). We are estimating ending stocks to drop to 120 million bushels, down from last month’s 125 million estimate.

Safras e Mercado said as of March 1, 37% of the Brazilian bean crop has been harvested vs. 28% a week ago vs. 33% a year ago and vs. 23% five-year average. Celeres weekly report out of South American reported that as of March 1, 61% of the Brazilian 2012-13 bean crop has been sold vs. 60% a week ago vs. 59% a year ago and vs. 46% five-year average…Jim McCormick

Wheat: The USDA will start releasing ratings on the first or second Monday of April. Export inspections were released at 24 million bushels with trade expecting 23-28 million bushels. The moisture equivalent received for several major Kansas City growing areas have seen almost twice as much as average. Wichita averages 1.23 inches in February a year and the actual total is 2.58 inches. Enid, Okla., averages 1.56 inches and actual is 4.41 inches. Lubbock, Texas, averages 0.78 inches and actual was 1.51 inches.

The CME is expected to change trading hours sometime this week. With the purchase of the Kansas City exchange, several traders are thinking we could see the Kansas City contract become the lead contract compared to the Chicago contract. Wheat looks to continue to trade under pressure as the weather situation appears to be getting better…Cordon Sroka

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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