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 email@example.com or call me at 888.391.7894 for webinar signup or to be added to my Premier Grain email distribution list.
Sign Up For This Week's Webinar
888 - 391 - 7894
312 - 957 - 8108
Join My Mailing List
Walsh Trading, Inc. is registered as an Independent Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. ("WTI") shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.