Apr 16, 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 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.

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Tim Hannagan

  Grain Analyst

  Walsh Trading

  thannagan@walshtrading.com

  888 - 391 - 7894

  312 - 957 - 8108

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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.

 

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