Apr 19, 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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The Grain Report August 9, 2013

Aug 12, 2013

By Tim Hannagan, Grain Specialist, Walsh Trading, Inc. You can contact Tim at 312-957-8108 or 888.391.7894 or email him at thannagan@walshtrading.com. For further market insights, visit www.walshtrading.com.

 

Weekly export sales were released Thursday at 7:30 AM CDT. 726,000 metric tons of wheat was sold for the new marketing year which began June 1st. This was up 22% from the previous week, but 22% lower than the four week average. Asian markets account for 70% of our feed grain exports annually. Not one Asian country placed orders in excess of 100,000 metric tons. They are clearly buying feed quality wheat at cash price discounts. Missing was number one world wheat buyer Egypt who has been absent from the U.S. buying list for nine consecutive weeks. In part wheat from the black sea region is being sold at a discount to U.S. prices as the Ukraine and Russia attempt to re- assert their positions as major world wheat exporters. Egypt will turn to us as exportable wheat supplies dwindle in Europe. Old crop corn sales scheduled to be shipped before the new marketing year begins September 1st stood at 290,000 metric tons. 850,000 metric tonnes are needed on a weekly basis to be price friendly. New crop sales for post September 1st delivery ran 220,000 metric tons. Key world player China was absent from the buying list. Clearly, China and their Asian neighbors are awaiting new crop supply at lower prices. Old crop soybean shipments were 79,000 metric tonnes and hardly worth mentioning. New crop soybean sales were 1.0170 metric tonnes. China accounts for 95% of our bean exports and purchased 950,000 metric tonnes of the total. Chinese trade data released overnight indicated 7.2 million tonnes were purchased in July. This is a record for the second consecutive month. This aggressive buying by China comes as they sell expensive old crop reserves to domestic users. It's normal for China to sell old crop reserves at a high price and buy on the world market at a lower price. After pricing in the week's bearish weather scenario Sunday into Tuesday we've seen short covering in the corn and bean market. The shorts have the profits. Their risk is the market information released Monday in the monthly USDA crop report. If the weather reports for next week confirm a continuation of cool temperatures and normal rainfall, it will likely set the tone for a lower start Sunday night into early Monday morning. The USDA crop report will be released at 11:00 AM CDT and will likely dominate the trade into the close.

 

Pre-report trade estimates suggest that corn production will come in at 14.036 billion bushels vs. 13.950 the month prior. Soybeans are estimated to be 3.357 vs. 3.420. Regarding soybeans the trade believes that late planting cool evenings and in some cases excessive rain hurt the crop. On the other hand the latest USDA crop condition report suggests soybean quality is well over the 10 year average. Higher corn numbers come as traders see 81% of the crop in its pollination stage with no real heat damage and timely rain. The changes suggested are marginal at best. What traders will be looking at is the ending stocks or carryover number. Carryover for corn is estimated at 2.013 billion bushels vs. 1,959 last month. Here's where we could see a surprise. Last month's number was lower than the month prior and the government seldom switches direction unless there's a dramatic change in usage and that's not evident. Soybean ending stocks are estimated to be 262 million bushels, well under last month's 295. Keep in mind total usage for the 13/14 marketing year according to the last USDA crop report is 3.264 billion bushels and subtracted from this year's estimated production of 3.357 leaves ending stocks at 93 million bushels. I do not believe this is going to happen. Something will have to change in the USDA database. Perhaps lower feed usage, bio-fuel consumption or exports. There is certainly room for a big surprise in beans. The government generally leans to the conservative side in its August report and starts making changes in September. I expect more neutrality Monday's report. Once the report is over the trade will go right back to trading the weather and its impact on current yields. Support on December corn entering the new week is 4.48 with resistance at 4.78 then $5.00. New crop November beans havesupport at 11.50 and 11.10. Resistance rests above at 12.10 then 12.50.

 

Support in September wheat is 6.25 and resistance at 6.85. If there are surprises in Monday's USDA crop report traders forgo trading the charts and trade on emotion. This will likely create extreme volatility.
 

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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