May 1, 2012
By: Lynn Miller – Grain Marketing Specialist
REMARKS: End of the month fund buying helped to give corn a strong close yesterday; however, fundamentally things are not painting a real cheery short term picture. The trade was looking for planting progress somewhere in the area of 42% coming into the weekly Monday night report. What we got was a huge 53% with Iowa making up a whopping 41% of their planting in just one week (that’s 10% per day) and Illinois now 79% planted. These numbers alone will pressure the new crop market at the open. The 10-day weather forecast is also getting some attention with a widly rainy pattern that may significantly slow down planting. The weekly export numbers came in at 24.9, considerably below the average trade guess of 30, making me wonder just where the large purchases are that were announced last Friday? On a more positive note, users east of us are nearly screaming for corn with basis levels narrowing steadily as the US farmer continues to grain. At this point, patience may be warranted. Once this crop is planted we can take the focus off of how fast and early it’s going into the ground and start paying attention to weather and growing conditions, that should bring with it opportunity. Technically all three indicators are bullish old crop with resistance at 6.45. Any close over 6.41 would break through the current downtrend of the market and may give us some upside potential. In the new crop, all three indicators are bullish the new by a pretty narrow margin with what seems to be strong resistance at 5.45.
SOYBEANS: -10 Nearby, -5 New Crop
With May deliveries taking place we may very well see speculator interest shift to the new crop as the market sees the 2013 US supply at ‘out of control’ tightness. Some think we will see over 80% of US production move to crush or export by March 2013 vs. the average of 64% this will help to trigger some real bullish speculation. Funds have been buyers of 29,000 contracts the last five days and now hold a 270,000 long. Weekly exports came in below the average trade guess of 22.0 at 15.4 but well over the 8.3 this week one year ago. We now only need to export 11 million bushels a week to meet the USDA’s estimate. Informa’s new Argentina soy number was reduced to 40MMT, 5MMT below the USDA’s April estimate, confirming fear that harvest results are worse than expected. Be ready for a wild ride. As I said yesterday, I believe the faster they run this market up the more profit-taking setbacks we will see come with it. Technically 2 of 3 indicators are bullish the old crop with the stochastics wanting to tip to the sell side. Old crop should have pretty solid support at $14.70. While in the new crop 2 of 3 indicators are currently bullish with the MACD also wanting to come to the buy side. Look for opportunity to come here.
The path for wheat keeps getting a little tougher. Yesterday’s crop rating has the US crop at 64% good to excellent, over the 63% last week and 34% last year. The Winter Wheat tour begins reporting today and the market is expecting most favorable reports, that will add weight to the market for the day. Fundamentally wheat continues to be stuck in a rut with least resistance probably to the downside. Any pressure on corn will keep wheat under pressure. Technically all three indicators are bearish Minneapolis with support at 7.58; however, this market is approaching oversold and that may give us a short term life preserver. In the Kansas City all three indicators are bullish with resistance at 6.88 and support at 6.15.
The information contained above was taken from sources which Wheat Growers believe to be reliable, but is not guaranteed by Wheat Growers as to accuracy or completeness and is made available for information purposes only. There is a risk of loss when trading commodity futures and options.