EHedger Afternoon Grain Commentary 2-28-2012
Feb 28, 2012
Grains closed strong with wheat leading the way higher. March corn settled 9 cents higher at $6.53 ½, March beans 11 ½ cents higher at $13.05 ¼, and March wheat 16 ½ cents higher at $6.62 ¼.
The soybean market has been especially supported with the assumption that South American production will be well below current USDA expectations. We are now above the $13 level and have almost reached the 61.2% retracement level at $13.34. Again, looking at the weather reports, we seem to have received plenty of rain towards the middle-end of their growing season and some of these production-cut estimates we have been reading seem over exaggerated to us. We would be using these targets to catch up on sales if you haven’t done so yet. For corn we have a couple of interesting patterns forming in the March and Dec charts. We are at the top end of a large wedge in March corn. For Dec corn, we broke through the bottom support but ended up being a false breakout as we are now back within the wedge range. The upside resistance level is now near $5.72.
Chart: March Corn
Chart: December Corn
For the majority of the day the market was "bullspreading" November 12 – November 13 beans and "bearspreading" December 12 – December 13 corn. This seems obvious when we look at last week’s Commitment of Traders report and see the "managed money" decreasing net longs in corn and increasing their longs in soybeans, soyoil, and soymeal. With a record net short position in Chicago wheat by the funds, we can still see that market find extra support from liquidation.
The next USDA Supply and Demand report will be released next Friday, March 9th. The report that could show the most surprises is the March Planting Intention Report on March 30th. Now that we are back to a corn-bean ratio of 2.30 (new crop) we could see some of those acres start to move back to soybeans.
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