Apr 20, 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 All American Grain Report

Oct 25, 2013

Tim Hannagan’s Weekly Grain Report

This is Tim Hannagan its Friday, October 25. The first report of the week was the Weekly Export Inspection Report Monday at 10:00 AM Central time. Corn inspected for near-term export was 32.2 million bushels vs. 22.2 the week prior, and four week average of 21.  It’s normal for demand to pick up at harvest time but this was measurable. Traders are wondering if China is coming in to buy corn like they have been buying beans.  Thinking has been with talk of better than expected yields, there’s one more new low price to come before China and other importers pile in.  This 18 million bushels bought by China is a red flag and China’s buying needs to be watched closely now.  It’s cheaper for Chinese corn users to buy U.S. corn than Chinese corn stocks.  There are areas where corn is 6 to 8 dollars per bushel in China.

 Bean inspections were 59.3 million bushels versus. 47 the week prior and four week average of 27.  Of the 59.3 million bushels, China was in for 45.3 of the total.  For September China’s average weekly inspection purchase was 4.6.  China is piling up purchases on two fronts.  One, it’s harvest time  and the U.S. is the only world port selling beans until South American crops come in next February.  Two, and maybe the most important reason, the drought conditions occurring in Argentina.  Argentina is the world’s third largest bean producer exporter and number one exporter of soymeal and soyoil.  WXRISK.com the weather site has Argentina dry all this past week thru into Sunday.  Longer-term models suggest a very hot and dry Argentina the first two weeks of November. 

Wheat inspections were 20.5 million bushels vs. 27.2 the week prior, and four week average of 32.  China was in for 8 million bushels compared to their September average of 10 million bushels. Brazil was in for 4 million bushels vs. their September average of 6.  Big buyers of large tonnage of wheat for human consumption stepped back.  Buyers of feed quality wheat are disappearing as it’s too expensive to blend wheat into the feed ration now.  December corn is 2.60 under December wheat.  For it to be cost effective the wheat corn/ spread needs to be 1.05 or less wheat over corn.  We look for demand to continue to pick up in November and December as Argentina shuts down their wheat export market, forcing Brazil to increase U.S. purchases.  Additionally, China’s drought in its primary wheat regions still prevails.  U.S. wheat is becoming more price competitive with the European Union wheat as well.  The only problem is the number one world wheat buyer Egypt continues to boycott U.S.  Wheat, as we’re still banning gun sales to them as their internal strife continues. 

 Monday’s 3:00 PM central time crop condition report was our first since September 30th. Bean condition improved to 57% good to excellent condition vs. 53% 21 days ago.  Every key Midwest producer improved.  Corn condition was 60% good to excellent condition vs. 55% on September 30.  Like beans, corn also saw every key Midwest producer increase.  Harvest was in line with expectations with corn 39% and beans 63%.  The better condition number will further talk of bigger production increases on the November 8 USDA monthly crop report. 

Corn and beans have dropped appreciably since the last report Sept. 11. If the November report comes in as bearish as expected, its low price results will be a harvest season low followed by a demand driven market.  With corn demand not yet bullish enough to drive prices up on its own, corn may yet make another new low as the November 8 report gives cause.  Beans are unlikely to take out the 11.65 low as harvest will be over before November 8.  Without weekly harvest results to sell, traders will only have the strong export pace to trade.  The report day break won’t last and should be a great buying opportunity.

 

  Tim Hannagan

  Grain Analyst

  Walsh Trading

  thannagan@walshtrading.com

  888 - 391 - 7894

  312 - 957 - 8108

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