The Grain Hedge Team provides a macro-focused daily view of the world’s grain markets. Kevin McNew received a bachelor’s degree from Oklahoma State University and his master’s and Ph.D. degrees in Economics from North Carolina State University. He spent 10 years as a Professor of Economics with the University of Maryland and Montana State University focusing on commodity markets and is widely regarded for his ability to boil-down complex economic situations into easy-to-understand concepts for applied life.
Soybean Resistance in Sight
May 12, 2014
Wheat futures gapped lower in the overnight session, largely driven by precipitation across the Southern Plains over the weekend. Colorado, Nebraska, eastern Texas, and eastern Kansas all saw between ½ and ¾ inch of much needed precipitation. This rain event was generally in line with weather forecasts for the weekend but traders will be quick to sell KC wheat futures on rain following a 93 cent move higher since mid – April. This afternoon’s crop condition report, released at 3PM central time, will drive wheat prices into the overnight session. Last week’s report showed 31% of winter wheat rated good to excellent but key producers, like Kansas and Oklahoma remain well below the national average in terms of crop conditions.
Corn futures drifted lower in the overnight trade on very little news. Taiwan issued a tender for 60,000 tonnes of old crop corn to be sourced from the United States, South America or South Africa. The Taiwanese issued the same tender on March 25th but rejected all offers citing high prices. Following last week’s very disappointing export sales report for corn, this tender will be an important gauge of international demand for old crop U.S. corn.
Soybeans pushed as high as 14.96 in the overnight session before selling back down to the 14.87 ½ level going into the morning trade break. Be wary of soybeans at this level if we approach the overnight highs as there is significant overhead resistance at the $14.95-15.00 price level. Resistance from a previous low on April 28th combined with the up-trend line that was broken on May 1st could provide enough selling pressure to reverse the latest move higher that started the day before the USDA WASDE report.
This week’s crop progress will be released at 3 PM CST today. Expectations are for the report to show corn 60-65 percent planted and soybeans 30 percent planted throughout the U.S. Weather in the first half of this week is not expected to favor planting as significant moisture is forecast to move across the Midwest through Wednesday.