Apr 18, 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 November 14, 2013

Nov 14, 2013

 This is Tim Hannagan it is Thursday, November 14th. Let's take a look at last week's crop report and see if we can uncover some hidden clues to eventual market directions. For corn the USDA estimated production at 13.989 billion bushels, which was 146 million bushels over the September USDA report. Yield came in at 160.4 bushels per acre, up 5 bushels per acre from September's report. The production number was closer to the low end of pre-report trade estimates. Traders initially feared that the report could come in over the high-end of estimates. This had the ending stocks, to be left over come the end of the marketing year September 1, 2014 at 1.883 b.b. only 32 m.b. over what was reported in September. The trade had feared stocks coming in well over 2 billion bushels. Now, should our next report further increase production, we could see 2 billion bushels ending stocks or more. What is not being discussed is the fact that Chinese production and imports numbers were left unchanged. Yet, the last 60 days have shown production problems in China's corn regions. China's last corn production estimate was 215 million metric tons, with the USDA projecting 211, and field surveys at 190 million metric tons due to weather problems. Their projected usage is 220 million metric tons. If China imports half the difference between low-end production and usage, we will export an additional 450 million bushels, putting our ending stocks at 1.350 or lower. The eventual Chinese business will more than offset any further production increases in the United States.

 

Soybean production was estimated at 3.258 b.b. up 108 m.b. over September and 43 m.b. over pre-report trade estimates. The yield was 43.2 versus 41.2. It looked bearish until the carryover or ending stocks came out at 170 m.b. only 20 m.b. over September. Current export sales are at 87% of the USDA forecast for the 2013/14 marketing year versus the five-year average of 58%. We only need to sell 114 thousand metric tons weekly to meet the USDA forecast. The four week average is 1.417 m.m.t. Clearly the USDA has underestimated demand. The trade sees 170 million bushels stocks as the USDA high-end estimate as they never come in low. This means it's more probable than not that soybean ending stocks will decline.

 

Entering Friday technical's read like this. January beans support is 13.10 then 12.85. Resistance at 13.30 then 13.65. December corn support is 4.25 then 4.20 with resistance at 4.36 then 4.50. December wheat support lies at 6.44 then 6.38 with resistance at 6.60 and 6.72. Just a note I will be holding a grain webinar at 3 PM central time Friday. You can attend live by going to the Walsh website at

www.walshtrading.com or listen to the recorded version at your convenience.

 

By Tim Hannagan

Senior Grain Analyst, Walsh Trading, Inc.
312-957-8108 or 888.391.7894
email: thannagan@walshtrading.com 

 

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.

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