EHedger Afternoon Grain Commentary 5/23/12
May 23, 2012
The soybean long liquidation continues with November soybeans finishing 24 ½ cents lower at $12.57 ¾. July wheat closed 20 cents lower at $6.65 ½ and December corn closed up a penny at $5.23.
This is a continuation of yesterday for soybeans and now we are down below the 200 day moving average in the November contract for the first time since February 23rd. The strong dollar and weak equities also made it difficult for grains to hold support as it was generally a "risk-off" trading session.
Chart: November Soybeans (red – 50 day, blue – 100 day, grey – 200 day)
The weather is expected to be warm and dry over the weekend across the Midwest but favorable rains are expected next week. Crush margins in China are currently negative and is contributing to the soybean weakness. The export demand came in all at once and it has now slowed. With an already massive long position held by the funds there wasn’t much new information to "feed the bulls". We are below many of the short term major moving averages in July soybeans and the next one to look for is the 100 day at $13.42 ¾ and the 200 day at $13.07 ½.
Chart: July Soybeans (red – 50 day, blue – 100 day, grey – 200 day)
July corn rallied back above $6 today which may have been partly from spread liquidation where traders were selling out of long beans and buying back short corn. We did see Ethanol production uptick again for the 4th week in a row but we also saw stocks go up as well. For now we expect continued resistance in new crop corn on any rallies.
Tomorrow morning we will have the Weekly Export Sales Report. Industry guesses are as follows:
Corn 900,000 – 2,000,000 MTs
Soybeans 700,000 – 1,100,000 MTs
Wheat 400,000 – 800,000 MTs
Source: Dow Jones
After the grains closed at 2 pm, we had a sharp rally in the equities and a slight break in the dollar. This should be generally supportive for the grains when they re-open at 5pm CST. If you would like a free trial of the EHedger research please click on the link below. To discuss opening a futures/options account please contact EHedger at 866-433-4371. Thanks have a great rest of the week!
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