EHedger Grain Commentary 4/3/2012
Apr 03, 2012
Grains finished mixed today with large trading ranges. May corn finished 3 ¼ cents higher at $6.58 ¼, May soybeans down 4 ¼ at $14.16 ¾, and May wheat finished a penny higher at $6.58.
Soybeans came in from the overnight session weaker and rallied sharply within the first hour of trading. Towards the end of the day the spreads started to sell off bringing soybeans down to the day session lows. Part of the selloff was associated with the Feds decision NOT to add any more easing measures at this time. When the news broke at around 1 pm we saw a rise in the US dollar and a fall in many dollar denominated assets (stocks/commodities).
Today’s market fundamentals weren’t of much significance to change the overall tone of the market. November soybeans were very close to reaching $14 but quickly sold off. The $14 level for November beans was a hard ceiling last September before falling all the way back down to the low of $11.34 ¾ in December. Now that we have retraced almost a full 100% you may find the market seeing this level as a good place to take some money off the table again, but we will see.
Friday's USDA report showed a decline in old crop corn supply which is helping May corn stay supported at $1.10 above December. They didn't find a large drawdown in soybean supply although the market was surprised with a much lower soybean acreage number than expected. So far November soybeans have received the largest rally from this report. We saw soybean open interest jump 31,000+ contracts on Friday and another +21,000 on Monday which means new money has been flowing into beans. With the new crop corn-bean ratio now trading above 2.50, more areas may plant soybeans where possible. We have to remember that the planting intentions were as of March 1st. The fact that we won't see the next acreage number until June may help keep soybeans supported to other markets like new crop corn until then. The next major resistance level should still be at $14 (November). For December corn the 50 and 100 day moving averages are at $5.63 and $5.6325 which may be the next areas of resistance.
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