Corn: Corn attempted to follow Friday’s trade with some light selling Monday. That selling was slowed by some light buying seen in corn directly and also support from both the bean and wheat markets.
While there was nothing wrong with Friday’s weekly sales report, it was a slowdown from what has been seen over the last few weeks. Trade is now estimating that the fund position in corn is long around 55,000 contracts. This number is slightly less than their estimate last week, but in the grand scheme of things, any long position under 100,000 contracts is negligible and still does not prove that funds intend to build a major long position like 2012 or 2008. While fund money is still coming into this market, the bulls should continue to go for the ride but it is still too early to assume a year long corn buying program.
On the flip side, bears can find chart resistance levels to sell at as long as they keep risk limited until corn can find at least three days of light selling. Hedgers that have held patient to this point might want to use current levels close to 470 chart resistance as a place to consider getting some sales started. Those looking back to 2009 (the last time funds were “neutral”), December topped out around 470, which also makes this a level to hedge.
Short term, the main direction for corn is still dependent if funds continue to be buyers. Longer term, the December has already bounced to the resistance that the spring weather concern was expected to push this corn to which now means an additional move higher will take another bullish factor to continue the push…Ryan Ettner
Soybeans: The bean market continued its march upward again Monday as both the meal and beans made new highs for the move. Without any confirmation of cancellations, the market bulls/funds seem to have complete control of the market. Their goal is to rally the market until demand is shut off and they want to see confirmed cancellations to believe demand has been shut down.
Hedge funds continue to pour money into commodities and now have $119.5 billion invested across 22 commodity markets. There has not been this much money in commodities since 2011. The funds are now longer in beans than they were all of last year when we had ending stocks at 141 million bushels.
The February WASDE report saw ending stocks this year will be 150 million bushels. This means that the funds own more beans this year than they did all of last year, even though the USDA projects there will be more beans left over than a year ago. World ending stocks are projected to jump from 58.65 last year to end up at 73.01 mmt this year, so it looks like we will not have a bean shortage globally. Stocks will continue to be tight here but with a surplus in SA we would look for demand to continue to shift to them. We also anticipate both beans and meal will be imported into the US and this will help relieve the domestic tight supplies.
Monday's export shipments of 46.7 million bushels were at the high end of the trade range of estimates. We have now shipped 1.317 billion bushels of the USDA anticipated 1.510 billion 2013/2014 total. Shipping out of Brazil looks to be slowed near term due to an accident at the number two soy shipping port Rio Grande. Wire reports say that due to an accident, one out of the five berths at the port will be down for up to two weeks. For what it’s worth, weather in SA is getting a bearish spin…Jim McCormick
Wheat: Wheat finished the day higher Monday in all contracts as we posted a strong technical pattern on good volume. Shorts continued to cover their positions with trade estimates of a net trading funds short of 34,000 contracts, which is about half of their shortest point.
We opened below the previous day’s low and closed above the previous day’s high, which means we would expect to see this market continue to move higher as there has been no lack of buyers here recently. Money flow has been a large driver behind these markets recently as we have been watching the Goldman Sachs commodity index continue to rally and with each higher day it continues to add to the bullish undertone of this market.
This market is a buy-in-breaks market at least for the next few weeks until we see the market break below any key fundamental level. We would expect the July KC contract to make a push towards the 685 level we have been working towards for quite some time.