Tim Hannagan's Weekly Grain Report
May 20, 2014
This is Tim Hannagan it's Tuesday, May 20. Looking back on corn, its numbers remain supportive. Monday’s inspection report, a gauge of demand showed 41 million bushels were inspected to be shipped. Anything over 40 million bushels is bullish as it keeps corn exports ahead of USDA projections. Last month’s USDA crop report raised exports and lowered our ending stocks for the fifth consecutive month, showing a stronger demand pace and talk of lower stocks on the June report. Monday’s planting progress came in at 73% complete. Key Midwest producers read like this. Illinois 84%, Indiana 72%, Iowa 84%, Missouri 92%, and Nebraska 91%. On next Tuesday’s crop progress report these states will climb over 90% planted. Then the psychology changes on weather. It's no longer weather and its impact on planting but weathers impact on emergence and eventual production. To date a warmer drier outlook meant a faster planting pace and lower prices. After Tuesday, it’s bullish as timely rain is needed for good development. Just a reminder a holiday is coming up with markets closed Monday. Seasonally corn turns up after the Memorial Day holiday. Support on July corn is 4.58 with resistance 4.90. Any move down towards 4.60 should be bought as that would be the worst case scenario before the crop is made. Wheat psychology may be changing as well. Monday’s condition report showed 29% of the crop in good to excellent condition, down for the fourth consecutive week and the lowest since April 7. This is all due to lack of rain in the Western plains wheat states. Yet, the July futures hit a low of 5.62 Monday, 80 cents off the 10 day prior high. With harvest starting in early June, this could be a sign funds are done buying crop decay. Drought starts out bullish then turned bearish to pricing. Wheat’s grown for human consumption with the processing of pastas, breads, and snack cakes. When the crop has a high rating, everyone wants it. When ratings are low demand is weak, with much of the wheat suitable only for the feed ration at low cash bids. Wheat also forces more corn into the feed ration due to its price to wheat two dollars cheaper per bushel. Big inventories in Europe are cheaper to the U.S. leaving the U.S. a third or fourth port of origin for wheat. July wheat resistance is 6.90 with major support 6.65. A close under and 6.44 is next.
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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.