Apr 20, 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 All American Grain Report November 7, 2013

Nov 07, 2013

This is Tim Hannagan its Thursday, November 7.  On Friday, November 8, the USDA will release its monthly crop report.  This report shouldn’t be viewed as the normal monthly report because it will combine two months of data instead of the usual one month amount from The USDA. This report includes crop data from September and October.  If it was for February and March when grains were locked up on the farm for a long winter’s nap, we would expect only marginal adjustments.  But with crops planted late, September and October were instead growing months, lending thought that the market may be in for a large adjustment from the last report September 9th.  In July and August there was much talk of lower yields due to late planting dates, fewer growing degree days, lack of sunlight  due an excess cloud coverage, and a hotter and drier than normal August.  Then the worm turned.  A crop tour noted much higher than expected yields, bigger ears of corn and more fuller, as well as many more pods on each bean plant than the year prior.  The talk was bio-genetic seeds won over the uneven growing weather.  As the September and October harvest rolled along, the talk in almost every Midwest state was yields looked better than earlier road side observations.  This has led to bearish pre-report trade estimates.  Corn’s average production estimate was 14.029 billion bushels vs. the last report in September of 13.043.  The ranges of estimates are 13.734 – 14.330. Yield was put at 159.2 vs. 155.3.  Additionally, harvested acres are estimated to drop off one million acres to 88.0.


Soybean production estimates are 3.215 billion bushels vs. 3.149 with a range of 3.123 – 3.298.  Yield is at 42.3 vs. 41.2 with harvested acres down one million acres at 75.8.  The ending stocks look to increase with production.  Corn stocks come the end of the 2013/14 marketing year September 1st are put at 2.044 billion bushels vs. 1.855 in September and 719 million bushels the year prior.  The range is wide at 1.799 - 2.344.  Beans are pegged at 177 million bushels vs. 150 in September and 125 last year.  The range is  145 - 240.  Wheat looks friendly at 529 million bushels vs. 561 and a range of 380 - 580.  Based on production estimates the corn ending stocks look right as corn demand has not yet ignited.  Bean stocks look tight as analysts see higher export numbers offsetting much of the higher production.  The big surprise in the report would be that production numbers for corn and beans come in lower than expected.  This is possible if the prior closing of the USDA has them not yet caught up.  Then the December report will give a more final production estimate.

An overly bearish soybean report could see soybeans extend its correction beyond report day as prices are still too high. However corn has been dropping since February and by most opinions is oversold.  Should the Friday crop report come out with overly bearish numbers, we should expect a sharp break that day.  The report is the last bearish supply side report of the year, and then demand becomes our pricing source.  With trend following funds holding a record short position to buy back, we are set up to put in a harvest low price report day and a great trade opportunity.  Note, corn has a 40 cent limit that seems to be hit on report day.  Option traders looking for a potential low risk trade on report day may consider this.  For corn, buy December 4.00 puts and buy December 4.50 calls for 4.4 cents or $225.0 in cash value plus commissions and fees.  This is a volatility trade to take off one side should a surprise move arise. For beans, buy the December 12.10 puts and buy the 13.40 calls for 10¢ or $500 plus commissions and fees.  Beans have a 70¢ limit daily.  Note, I am holding grain webinars every Thursday at 3:00 central time, just go to www.walshtrading.com to get the link for free admission.

Tim Hannagan

Grain Analyst, Walsh Trading

thannagan@walshtrading.com

888 - 391 - 7894

312 - 957 - 8108

 

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