February 18, 2014
Grain Marketing Specialist
Short covering continues to be the story, spilling over from last week’s slightly friendly USDA report. According to the Commitment of Traders report funds are still short 30,000 contracts. Crop insurance continues to be priced for the month of February off of Dec 14 futures, so far the average price is $4.5753. Technically, nearby resistance remains at $4.49 CH14 with nearby support at $4.40 CH14.
Dry weather over the weekend in Brazil pushed nearby beans sharply higher in the overnight. Early reports indicate as much as 5-30% may be at risk due to dryness. Funds are now long an estimated 154,700 contracts, which has the trade wondering if nearby beans are overbought. Technically, we blew through our resistance mark of $13.40 SH14 last night, with last Friday’s high of $13.56 SH14 well within reach today. Crop insurance pricing for the first half of Feb has Nov 14 futures at an average of $11.1945.
Wheat demand remains strong as the USDA tightened up domestic stocks by 50 mln bushels in their report last Monday. Funds continue to cover the short position, rallying from lows set back on January 31st. Some traders are concerned with a potential wheat winterkill with sharply colder temperatures and limited snow cover in the Nebraska/ South Dakota area the next couple weeks.