Sep 23, 2014
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February 2014 Archive for The Grain Report

RSS By: Sean Lusk, AgWeb.com

Market updates from Walsh Trading.

Tim Hannagan's Weekly Grain Report for Feruary 28, 2014

Feb 28, 2014

 This is Tim Hannagan, it's Friday, February 28th. Our first demand-side report came with the weekly export inspection report Monday at 10 AM central time. Wheat demand remains weak with inspections at 16 million bushels. 30 or more is needed to be bullish. Corn came in at 31 million bushels inspected and shipped, down 1 million bushel from the week prior. It's not a great demand signal but a good one. Demand continues up and should have traders looking for a bullish March 10th crop report with higher export projections and lower ending stocks and then a bullish March 28th planting intention report as we are looking for 2 to 4 million fewer corn acres planted.

Soybeans stole the show this week. Beans inspected were 46 million bushels versus 54 the week prior and the four-week average of 57. What needs to be noted, of the 46 million bushels that were shipped, China was in for only 25 of the total. The five prior weeks had China in for 39, 47, 34, 44 and 45. The futures were higher on the 46 million bushels still being too much shipped considering that we only have 150 m.b. ending stocks, the second lowest on record. China is backing off shipments now and the last two weeks of export sales were at or near marketing year lows. We are seeing the previous very bullish pace softening, which indicates a top should be near. Last March beans shipments fell apart. As March began we saw 44 m.b. inspected and the next week 17 and lower the following weeks at 8.9 and 18.4. Though we may have put in a near-term top prior to the March 10th USDA report, we can't expect a seasonal large break until after the report as funds fear the  report may raise exports enough and lower ending stocks from the second lowest on record to the lowest. Any post March 10 break would be limited to 13.25 as traders will wait for the March 28 planting intention report for acres inside. Beans have to stay high enough to ensure beans acres to be planted don't fall too far under the year prior with the low inventories. The wildcard this week was the President of the Ukraine being thrown out of office and leaving their grain exports in jeopardy. They are a major corn supplier and wheat exporter in the area and that certainly sets up the US to garner that business. Like the bean inspection report, Thursday's weekly export sales report showed declining sales overall but still too much Chinese purchases at 287 thousand metric tons. Overall sales were 367 thousand metric tons. Last February 28th, a year ago, we saw exports of 684 thousand metric tons then in March 392, 66, 107 and 66. March saw inspections shipped and export sales collapse as Brazil overtook the U.S. as the world's primary port of origin for beans.

Support on May wheat is 5.80 resistance 6.18. May corn support is 4.50 resistance 4.70 then 4.82. May bean support is 14.00 then 13.75. Resistance 14.50. Just a reminder I hold a weekly webinar grain discussion each Thursday at 3 PM central time. I discuss every aspect of the grains for about one hour. It's free, so go to the Walsh website for information, or register below.

 

Webinar Sign Up

 

 

  Tim Hannagan

  Grain Analyst

  Walsh Trading

  thannagan@walshtrading.com

  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.

Correction then Rally for Corn and Wheat

Feb 26, 2014

 Corn gains for the month of February are marginal at 25 cents.  Most of the gains came from short covering.  Trend following funds were short 142 thousand contracts three weeks ago and now just above 30 thousand.  This leaves some longs with profits to take them due to month end profit taking.  Should we get some month end balancing I am looking for corn to not break below 4.50 basis May futures.  The USDA AG Forum Outlook, which gives thoughts prior to the March 28th planting intention report, suggested corn acres to be planted at 92 million acres vs. 95.4 last year.  This will support corn into the March 10 USDA monthly crop report and the March 28 report on planted acreage.  The perception will be acreage cuts will be greater March 28th, and we will get the third consecutive monthly decline in ending stocks on the March 10th report.

Wheat gains of 50¢ this month continued off light buying by speculators and short covering. The three week’s prior, trend following funds were short 196 thousand contracts and entering this week just 80 thousand short. The buying and short covering all comes as traders don’t want to be short going into March when wheat breaks dormancy and speculators are buying off anticipation that the drought in the western wheat states will continue.  Crop conditions are very low and will challenge the crop to find near perfect weather to catch up.  Look for month end profit taking that could take May futures down to a low of $6.00.

I therefore am proposing two trades one in futures and one in options. If May corn futures trade back down to the 4.50 -4.52 level, look to go long futures at this level to eventually challenge the longer term 4.70-4.75 level. A good to cancel stop loss should be entered under 4.40 for downside projection. If we see a pullback to the aforementioned level in May Wheat, I would propose going long the May 6.40 call for ten cents or in cash value $500.00. . The risk on the trade is the price paid for the option plus all commissions and fees.

For those interested Walsh Trading is holding our weekly grain webinar series this Thursday February 27th at 3pm central time hosted by our Senior Grain analyst Tim Hannagan. Tim has been ranked #1 by Reuters and Bloomberg in 2011 and 2012 for his most accurate end of year price predictions for soybeans and corn. Registration is free and if you cannot attend live, a recording will be sent to your email upon signup. Link for registration is below.

Register Here

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS. 

Tim Hannagan's Weekly Grain Report for February 20, 2014

Feb 20, 2014

 This is Tim Hannagan it is Thursday February 20th.  Corn gains on the month are marginal at 25 cents.  Most of the gains came from short covering.  Trend following funds were short 142 thousand contracts three weeks ago and now just 36 thousand.  This leaves some longs with profits to take them due to month end profit taking.  Should we get some month end balancing I am looking for corn to not break below 4.50 basis May futures.  The USDA AG Forum Outlook, which gives thoughts prior to the March 28th planting intention report, suggested corn acres to be planted at 92 million acres vs. 95.4 last year.  This will support corn into the March 10 USDA monthly crop report and the March 28 report on planted acreage.  The perception will be acreage cuts will be greater March 28th, and we will get the third consecutive monthly decline in ending stocks on the March 10th report.  We could see further gains up to 4.82 prior the report March 28.  The May support lies at 4.58 then 4.50 with resistance 4.70 then 4.82.

 Wheat gains of 50¢ this month continued off light buying by speculators and short covering. The three week’s prior, trend following funds were short 196 thousand contracts and entering this week just 80 thousand short. The buying and short covering all comes as traders don’t want to be short going into March when wheat breaks dormancy and speculators are buying off anticipation that the drought in the western wheat states will continue.  Crop conditions are very low and will challenge the crop to find near perfect weather to catch up.  Look for month end profit taking and if a pull back to the low 6.00 area is seen, be a buyer.  May support is 6.00, resistance 6.18. 

The soybeans 75¢ rally this month came on fund buying.  Trend following funds enter the weeklong 154 thousand contracts up 35 thousand from the week prior.  A month end profit taking break is next week’s risk. If it occurs we will test 13.25 and maybe 13.00 basis may. What continues to prop soybeans up is China’s buying of U.S. beans while waiting for Brazils harvest to pick up.  Rains the next 10 days in central Brazil look to be 2 to 5 inches with 80% coverage.  This lent to thinking of harvest delays and keeping the U.S. ports active and a new monthly price high this week.  May support is 13.25 then 13.00 with resistance 13.50 then 14.00. I will expand in great detail on all these issues on Friday February 21 at 3:00 PM on my weekly webinar.  Those interested, its free just go to the Walsh website at www.walshtrading.com or click on the signup link below.

Register Now

 

Tim Hannagan

  Grain Analyst

  Walsh Trading

  thannagan@walshtrading.com

  888 - 391 - 7894

  312 - 957 - 8108

Join My Mailing List

 

 RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.

 

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. 

 Sign Up For This Week's Webinar

 

 

 

  Tim Hannagan

  Grain Analyst

  Walsh Trading

  thannagan@walshtrading.com

  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.

 

Tim Hannagan's Weekly Grain Report

Feb 07, 2014

This is Tim Hannagan it is February 7th. The weekly export inspection report came out Monday at 10 AM central time. Beans inspected and loaded on ships were 45.4 million bushels, down from 73.9 the week prior and four-week average of 61. China was in for 30 million bushels of the total versus 47 million bushels last week thus making their second lowest import in three months. We expected lower business as China's in their lunar holiday this week as well as soybeans are being bought in Brazil now at one dollar under U.S. posted prices. Our export business is still good, just no longer great. It should continue to erode into month end. Weekly inspections last February averaged 37 million bushels, March 21 million bushels and April only 10 million.

 Corn inspections were 21.6 million bushels down from 29 million last week. Wheat inspections were 11.6 million bushels versus 14.6 the week prior. Both corn and wheat are showing weak demand near-term. Thursday's weekly export sales report showed 577 thousand metric tons of beans were sold last week for future shipment. China was in for 436 of the total versus the two prior weeks of 251 and 259. China was overbooking ahead of this week's lunar holiday closings. Last February the average was 341 weekly and March 305. With soybeans selling one dollar lower in Brazil and harvest underway we have to assume the seasonal correction is near. Additionally, we saw decreases or cancellations of 530 t.m.t. thought to be China.

 We have our USDA monthly crop report out Monday at 11 AM central time.  The last five reports we broke down after the report as funds took profits and pay bonuses on profits taken. Should the heat dome threatening crops in Brazil said to be coming to an end late next week, coupled with the fact if we come in Monday and  get a neutral soybean report with unchanged on ending stocks, March beans could pull back to 12.60. Yet, a 5 million bushel or more cut in ending stocks and talk of a heat dome extending, we will test 13.75 or higher quickly. Since the crop report is late in the market trading day there's time to get the latest weather updates ahead of the report’s release. If we don't get any bullish surprises for grains Monday, we can expect prices to correct. Support on March corn is 4.40 then 4.20 with resistance 4.50 then 4.60. Support on March wheat 5.56, 5.50 resistance 5.96. Support on March beans 13.20, 13.00, 12.60 resistance 13.40 then 13.75.

To view a recording of my weekly webinar held Thursday February 6, 2014 click obn the following link: View Recording

 

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.

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