Corn: Bulls arrived early to help push the corn back up to resistance levels on Monday. While most corn news was quiet, there was some spillover support from wheat again. When trade ended last week, there was a forecast for major rains in the HRW areas, most of which were removed Monday, offering support to wheat and corn support.
With the upcoming stocks report just a week away, there is solid reason why old-crop corn traders would want to be light buyers anyway. Corn has already rallied well on strong sales reports all year long but Monday could show corn bulls that we have less corn on hand than we thought. Right now it is only a guess what we will see next Monday, but bulls will likely be happy to pre-buy going into the report. Bears should remain in the new-crop contract.
Yet another widely watched forecaster mentioned the need to watch the quickly building El Nino probability. He went as far as to say that these conditions have not been seen since 1997. Looking back to how December traded in 1997, it is interesting to know that the chart appears almost identical to our current December chart. So, what happened going forward? In ’97, the December corn topped on April 1 and fell 24% into July. While there was a bounce found after that by the end of the contract corn was still off 15% from the April 1 high…Ryan Ettner
Soybeans: The week’s trading stated out on a positive note as Friday’s sellers seemed to turn into today’s buyers. The day’s trade volume could be called moderate at best. New information to trade was lacking with spillover support from the strong day in wheat and corn providing the best support for the market.
There continues to be talk within the industry that China is doing its best to get out of bean purchases as well as try to resell its buys into the United States. The problem for the trade is there is still no confirmation yet to how many bushels have been canceled or sold into the United States. The latest rumor is that 10 or more cargoes of Brazil soybeans are headed to U.S. shores. These were ordered by Chinese buyers months ago but due to sharply lower demand, they are trying to find someone else to take the product.
U.S. prices currently have almost a $50 per tonne premium over Brazil. Today’s beans inspections came in at 732,132 tons, which was viewed a little negative as the trade was expecting inspections to come in closer to 770-925,0000 tons.
AgRural estimated Brazil’s crop at 86.0 mmt and that 63% of the crop had been harvested. Last year 60% of the crop had been harvested at this time. Safras e Mercado said 67% of the Brazilian bean crop has been harvested. Funds were an estimated buyer of 6,000 beans today.
Next Monday, the USDA will be releasing both the quarterly stocks report as well acreage report. The quarterly Grain Stocks is a survey of grain holders revealing how much grain is left over after the second quarter of usage. USDA will use this report to evaluate the unknown demand in the grain industry and then use this information to make adjustments on upcoming monthly WASDE reports. The Prospective Plantings report is the first official survey of farmer expectations for this spring. Traders should use caution as we get closer to the reports as the release of these reports tends to lead to dramatic moves one direction or another…Jim McCormick
Wheat: Wheat finished the day higher Monday as we made a push to test the recent highs amid buying on concerns that the Russia and Ukraine standoff doesn’t appear to be getting any better.
We saw good buying enter the market overnight around the time the European markets opened and continued to find strength through the trading session. We failed to move into new highs for the move but we did still have a strong day on moderate volume for the move. This break in the market was enough to push us below the recent uptrend line but the break was not enough to convince trade to liquidate additional long positions.
Managed money added longs last week bringing their total to about 25,000 positions, up 13,000 week over week. We could see these longs add additional longs if we do break into new highs and with the lack of precipitation to relieve dry conditions in the plains and a Ukrainian Russian situation continuing to escalate we wouldn’t expect a mass liquidation of longs based on these two issues.
We do have a quarterly grain stocks report on Monday which could affect these markets on Thursday and Friday. Look for resistance near the recent highs but a breakout suggested the longs are still firmly in control of this market.