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Weak Trade for Corn, Wheat Markets

April 13, 2012

 

This information is provided by Archer Financial Services, Inc., 800-933-3996.
 
The corn and wheat markets saw a weaker trade for the week as May corn closed nearly $.30 lower, while the wheat market slipped $.15 lower. The soybean market fared a little better as May soybeans actually closed higher for the week, yet November soybeans were off nearly $.20. 
 
Spread activity was rampant this week as the July/December corn spread corrected over $.30 from its highs. The soybeans spreads went the other way as May soybeans gained over $.30 on the November futures this week. The corn market was disappointed by the lack of a reduction in the expected carryout figure released on Tuesday by the USDA. 
 
There was some supportive data in the report, yet the market corrected sharply due to a void of fresh exciting bullish news. The market treated a largely neutral report as a bearish report. New crop corn values began to remove some of its long held weather premium as freeze damage was limited and favorable rains were moving across the Corn Belt on Friday. 
 
Planting progress advanced briskly in the lower half of the Midwest and the forecast is favorable for that to continue across the Corn Belt next week. This is a market that may continue its downtrend for the time being as a test of its March low at $5.23 is likely, with downside risk near $5.00 possible into the first of May. 
 
A possible supportive feature may be fresh Chinese demand that was rumored late this week.  New Chinese demand will support old crop corn values and provide spillover support to the December contract. The soybean market has a very sound fundamental picture to it. However, the caution to this market is the record high open interest and the record fund long position. 
 
One only has to look to the cattle market to see what can happen if the funds decide to exit the market. Yet, November soybeans still may provide a hedging opportunity for producers above $14.00 in the coming weeks.
 

 

(click the charts below to enlarge)

 4 13 12 Market Movement

 

4 13 12 Prices

 

4 13 12 COT

 

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