Wheat Fundamental Support
Wheat finished with support yesterday on concerns of colder-than-forecasted temperatures and the trade looking at a fund short position that was larger than initially anticipated.
Thursday’s stocks report is likely to show large enough stocks that even in the face of a weather issues with U.S. wheat, we likely will not see a major move higher that is sustained in wheat. The dollar traded lower yesterday and this could have also opened the door to some buying.
Wheat ratings this week will be important as this would take into account the first major freeze we saw 10 days ago. This could be a large issue as temperatures dipped again.
Currently we feel the market is stuck in the sideways range we have been in for months, and this likely isn’t going to change as the fundamental set up doesn’t offer us the opportunity to make any large moves higher. Without world production issues and even with a weather issue in the United States, it's not likely we will see the drivers needed to push us out of the sideways range soon.
- Trade estimates for Thursday’s report are 1.356 Billion bushels
- Export inspections yesterday were 327,118 compared to last week’s 470,199 tonnes
- Commitment of traders Friday saw funds sell 14,331 contracts of wheat taking their net short to 81,837
Corn Fundamental Support
It was tough to move corn very far yesterday, with most preparing for Thursday's acreage number from the USDA. We now have the average estimate of all analysts, which came in at 98.972 million acres. Let's keep in mind that our own acreage poll actually suggests an even higher number at 90.413. While this acreage report is limiting gains in corn, it is by no means surprising. This is why pre-report selling would be expected to be minimal.
Wheat attempted to help corn yesterday, with that market up double digits for a large portion of the day. May corn took out the 100-day moving average yesterday, but found only limited buy stops. When that important chart level was taken out, there were only 3,419 contracts traded, which is a small amount for taking out such a seemingly important level.
If fund short covering was seen yesterday, it was relatively light again, but funds have put together enough "small" buying days to now being short just about 155K contracts. This is a decent amount from their recent record short of 229K. Let's look for light pre-report selling going into Thursday with the acreage and stocks number offering guidance Thursday/Friday.
- Wheat attempted to help out again and could offer light support leading up to Thursday
- Buyers can again look to buy a pullback to recent support but should look for quick 5 - 6 cent profits if available
- Funds have short covered a fair amount already but still have more to go which corn bulls can count on
- Sellers can look for light pre selling ahead of Thursday likely getting more traction on a potential turnaround Tuesday today
- Given that trade has anticipated large acreage for over a month now the total bearish reaction could be limited
Soybean Fundamental Support
The soybean market started the week out on a rather quiet note as most of the world traders were still off yesterday for the Easter holiday. The traders that were present were positioning for this Thursday’s reports.
The bean oil continued its march higher yesterday as the palm oil market was higher again last night. Traders are estimating that 83.057 million acres of beans will be planted this year, with the high estimate being 84.200 acres and the low end being 81.600 acres. Allendale is anticipating 82.575 million acres of beans will be planted this spring based on our Annual survey. Last year we planted 82.650 million acres. In March, the USDA put bean acres at 82.5 million at their Ag Forum meeting.
As for the quarterly Grain Stocks report, it gives the trade an update on how much old crop is left over as of March 1. This report is distinctly different from the monthly ending stock numbers you hear about. On the monthly report, the USDA is trying to guess where stocks would be at the end of the marketing year on August 31 for corn and soybeans. The trade sees soybean stocks at 1.556 billion.
We are estimating stocks at 1.573 billion bushels. Last year at this time stocks were 1.327. Yesterday’s weekly exports inspections came in at 568k tons, which was within the trades estimates of 450k to 650k tons.
Friday afternoon's weekly Commitment of Traders report showed the following changes for Managed Money positions between March 15 and 23. Over that time period, funds purchased 31,908 contracts of beans. This was the third week in a row that funds were buying beans. Over the past week funds went from a net long of 21,774 to now a net long of 53,682. Over the past three weeks funds went from -81,458 to now +53,682. This is their biggest long position since August 11.
Price-wise we continue to look for the trade to continue its overall wide sideways range that it has been in for the past few months. We believe we are in the process of putting in the spring high. We look for a choppy trade until the numbers are released on Thursday.