USDA data turns bullish for corn, soybeans

Grain & OIlseeds Report

Corn: With the USDA report behind us, the bargain buyers came in as anticipated. Right now, speculative bulls can argue against seeing a 2 billion bushel carryout number and no one can argue for another month. Add in the expected squeeze going on in the May contract, and it became a great day for speculators to rally the old-crop corn allowing the new crop to follow along.

December reached close to 543 resistance while July remained 8 cents short of its 669 resistance. All of this speculative buying was done while a four-day window for planting began Monday. Just about all areas have an open window for planting until Friday to get as much done as possible. Some heat Tuesday with some highs in the 90′s for Iowa should aid in drying to keep this four-day planting pace moving quickly.

Right now, the forecast for rain on Friday looks to drop 1 to 1-1/2″ of rain in limited areas. Monday’s forecast update had much less rain in the six- to 10-day and 11- to 15-day forecast. Speculators ran the corn close to resistance on strong volume, which is a bullish sign, but the fundamentals suggest a good planting pace.

Monday certainly looked to have fund buying involved. We have seen funds come in and buy on three different one-day runs lately, but they have yet to back it up with buying after that first day. Funds and other speculators have used up all the available “easy” chart room for a bounce. Now we will see if these buyers want to break resistance and start making a larger move in this market.

Corn bulls have to decide if they want to take out resistance with good planting weather. Bears will certainly defend first resistance in both old and new crop and if taken out will have to hold off for a larger bounce. Corn planting progress came in at 28%, up from 12% last week. The five-year average is 66%…Ryan Ettner
Soybeans: With the monthly WASDE report out of the way, the bull spreaders were back and putting on the spreads in a big way. The May soybean contract continues to be squeezed into its final day of trading, which is Tuesday. The session high for the May contract was $15.27-1/4, which was the highest this contract has traded since the end of September. That price was also the highest price on the continuous chart since November.

The trade will be watching to see if the July contracts will try to make up the $1.03 discount to the May they are currently trading at once the May goes of the board. New-crop beans continue to lag on talk of acres shifting away from corn and into beans due to planting delays. Hangover from Friday’s negative new-crop estimates kept the new-crop market down compared to the old-crop contracts. The lack of producer selling due to aggressive planting provided the market with some support. The lack of producer selling continues to keep the cash basis firm.

Planting progress released after the close showed that 6% of this year’s crop is in the ground. Last year 43% of the crop had been planted and the five-year average is to have 24% of the crop in the ground. The trade was looking for 8% to 10% of the crop to be planted.

The April NOPA crush will be released Tuesday. The trade is looking for a crush number between 125 and 126 million bushels. If this estimate is correct, the USDA would still be underestimating the amount of beans being crushed. Soybean export inspections came in at 3.351 million bushels, which was within the expected range of 3.0 to 6.0 million bushels. The continued tight cash market should provide support for the old-crop beans while the larger-than-expected U.S. new-crop carry out and projected record world numbers should continue to put pressure on the new-crop contracts…Jim McCormick

  • Wheat export inspections were 23.986M bu, which were much better than the estimates ranging from 15.0-19.0M bu.
  • USDA expects increased wheat production estimates in the Black Sea region with Russia’s production seen at 56 mmt, up from 28 mmt last year.
  • The wheat complex finished higher today based on weather concerns and being a follower of the strong corn market. KC wheat led the way as trade is concerned with temperatures reaching the high 80s to low 90s in HRW areas over the next few days.
  • Wheat Good-to-Excellent rating came out unchanged this week at 32% for winter wheat.  Spring wheat plantings came out at 43% versus the 5 year average of 63% planted. Spring wheat could continue to find support until major planting progress is shown.
  • July Minneapolis wheat managed to close above the 65-day MA of 806’3, but will now need a close above the uptrend line to make another move higher… Alex Bassett
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.

comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome