Apr 18, 2014
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The Grain Report

RSS By: Sean Lusk, AgWeb.com

This is Tim Hannagan it's Friday, April 11. Our first crop condition report of the year for wheat came out this week and will come out each Monday at 3 PM central time. This report is leaned on heavily by large traders to determine whether the crop is getting better or worse on yields. This first report showed 35% of the crops in the Western wheat states are in good to excellent condition, down 1% from 36% a year ago. A good crop rating is  65%. When this crop went dormant the last crop condition report November 24, 2013 showed 62% in good to excellent condition. The 27 percentage point drop was the largest ever over a winter period and the worst for this time of year in the last 12 years. Two main reasons were the drought and the polar vortex. This winter subzero temperatures were consistent and often and caused a lot of stress and winter kill in the young wheat seedlings lying dormant. Key states to follow are number one wheat producing state Kansas, then Texas, Nebraska, and Colorado. The key to trading now is to follow one weather report at a time one week at a time. The current forecast by WXRISK.com the AG weather site sees rain falling on the eastern side of those major states we just noted. Should this system track farther east over the weekend taking the rain out of the western wheat belt, look for a higher open Sunday night but should the system hold as projected, followed by another rain system, with even more rain called for the following Thursday and Friday we should expect May wheat to break 6.52 support and test 6.44 major support before short covering or profit-taking starts. This first-rain system begins Saturday, Sunday, and Monday and then a second system starting next Thursday and Friday. Although the rain is bearish for wheat, it's brings light support to corn, as  the rain being forecast across the Midwest and the cold temperatures, look to delay fieldwork being done in the Midwest and planting being done in the southern Delta. We don't expect a big corn rally off the forecast but we do expect corn to hold its support at 4.94. Beans of course are planted later so it’s  not as concerned about planting delays at this point but more concerned about the softening demand with Brazil  noting that China has canceled more beans shipments which may be re-purchased by the US to make up for some of our shortfall on ending stocks. Technical’s read like this. May wheat resistance is 6.68 then 680 with support at 6.52 and 6.44. May soybean support is 14.55 then 14.20 with resistance at 15.15. May corn resistance is 5.14 support 4.94 then 4.88.

For those interested I hold a weekly grain webinar each Thursday at 3pm. I cover everything related and pertinent to the grain market in detail. It is free for anyone who wants to sign up and link for sign up is below. If you cannot attend live a recording will be sent to your email upon signup.

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Tim Hannagan's Weekly Gran Report for February 14, 2014

Feb 14, 2014

 This is Tim Hannagan its Friday, February 14th.  Mondays USDA crop report had no surprises to trend any of the grains.  Corn had the biggest cut in stocks coming in at 1.481 billion bushels, down 150 million bushels from last month.  It is a small cut in stocks but it’s the third consecutive monthly drop in ending stocks.  The trade will expect the March report to drop as well.  After month end profit taking we can expect a move higher into the March 10th monthly USDA  crop report, then higher again into the March 28th planting intention report expected to show farmers will plant two to four million acres less corn and more soybeans.  There’s no major bull move here with our 1.481 billion bushels ending stocks as ample supplies but all the bearish news is in and with funds heavily short we should expect more short covering on several expanding issues.  The main issue is we’re exporting ethanol to Brazil and China. This will draw down ethanol reserves requiring more corn processing.  Additionally more corn in the feed ration as wheat prices are too expensive compared to corn to blend into the feed ration.  Last year saw a record amount of wheat into feed usage.  Support for May corn lies at 4.40 then 4.28.  Resistance 4.58 then 4.70.

 Wheat has ample supplies and demand is neutral at best. However trend following funds hold a short position of 90,000 contracts.  We’ve seen short covering strength off declining crop ratings and a continued drought in the western wheat states. Note, western plains wheat will break dormancy in March. March could be a big short covering month. Wheat closed right on resistance. For May wheat, a higher close Tuesday when we re-open after the holiday sets up next resistance at 6.18. Support lies at 5.82 then 5.68.

  Soybeans spent the week trading two issues, one bullish and one bearish.  The bullish news is Argentina the number three world bean producer and number one exporter of soymeal and soyoil continues to store what’s left of last year’s crop or 11 million metric tons.  Farmers have been unwilling to sell with a 35% tax on them and this left their crushers unable to meet demands.  Our market looks at them just like a drought or any bullish news keeping beans from coming to market.  The bearish news is the rumors China is canceling future cargo ships of U.S. beans and re-buying on Brazilian ports at much cheaper value.  May bean support is 13.00 then 12.65, resistance 13.50 then 14.00.   Thursdays weekly export sales report showed 173 thousand metric tons were sold last week, a very low number and bearish demand signal.  301 thousand metric tons were switched from unknown and 326 t.m.t. decreased from unknown, with unknown spelled CHINA. We had switches and decreases of over 600 thousand metric tons but we also have an increase of 320 t.m.t. for China.  This is what sent prices higher Thursday into early Friday.  But all the switches and decreases and cancellations are adding up signaling a near-term top might be in today or this coming week.

Just a reminder every Thursday at 3:00 central time, I am holding a grain webinar discussion talking everything from supply, demand, charts and weather for about one hour. The webinar is free for anyone to attend and if you cannot make it live a recording will be sent to your email per signup. Simply email me at thannagan@walshtrading.com or call me at 888.391.7894 for webinar signup or to be added to my Premier Grain email distribution list. 

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  Tim Hannagan

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  Walsh Trading


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