This information is provided by Archer Financial Services, Inc., 800-933-3996.
It was a quiet start to the week in the grain markets, but the volatility picked up on Wednesday ahead of the February USDA Report.
The grains started the week in a sideways pattern on continued solid cash demand, while gaining some technical buying interest as corn, soybeans and wheat traded solidly above their 100-day Moving Averages.
Leading up to Thursday’s report, the trade sentiment was that the market was either going to be provided with positive demand adjustments and production declines in the Southern Hemisphere that would create a corn test of its January high or that the news may help to put in a temporary high and lead to a sell off.
The latter appeared to occur as only mild upticks in demand were revealed in corn and wheat, while the production declines in South America fell mostly in line with expectations. For the week, corn was off $.10-$.20 and bean values were mostly unchanged due to a late Friday rally.
The wheat market took the biggest hit as European weather became more favorable and an increase in global stocks lead to a $.30-$.40 decline. March wheat closed back below its 100-day Moving Average.
Grains may very well start the week lower following its late week decline, but I do not look for a much downside as demand continues to outpace the USDA forecasts at this time. The demand estimates may ultimately fall in line with current projections, but only if prices remain at current levels or higher.
A large break to prices will only encourage additional interest in our grains and given the historically tight carryout estimates, that is interest that we simply cannot afford. Look for another surge to prices sometime in the next 30 days that may provide an excellent opportunity for producers to sweep out some old crop inventory and advance sales for this summer’s crop.
(click the charts below to enlarge)