Grain Market Chatter Closing Comments 03/10/2015

Craig’s Closing Comments

March 10, 2015

If you have been attending our marketing meetings you have heard us talk about seasonal opportunity.  Since we are starting to come into the months of seasonal opportunity I thought it might be time to start sharing the New Crop charts periodically so you can start to mull-over new crop sales and levels you would like to be selling at.

All of us in the grain department are available to help you make informed decisions, so feel free to give us a call.

Corn:

Well, we got a little support out of the USDA today, nothing earth shattering, but in a market environment that has resembled a vacuum anything is welcome.   They dropped ethanol useage 50 million bushels, but increased both export and feed use the same 50 million bushels, thus netting a carryout of 1.777 billion bushels. (down 50)  Lower South African supply prompted a reduction in world stocks as well. 

We saw the nearby trade both sides today with the strength of the dollar keeping any attempt for gains at a minimum.  There are good reasons on either side to make a move from this narrow range we seem to have been stuck in problematic.  If we would break sharply to the downside it would remove any weather premium if planting is slow or we find dryness in the Midwest.  While the market is fearful of a sustained rally since the average US Farmer is sitting on record unpriced stocks.

The market will now set to trying to out-guess the March 1 stocks report and planting intentions both due out March 31 while keeping an eye on spring weather.

In the old crop, today we closed below the 10-day moving average, putting all three indicators in full-fledged bear mood.  But this sideways market is really hard to read.  I look for us to stay between the range of $3.74 and $4.00 without any new news.

As for the New Crop, all three indicators we watch have turned bearish and the market has settled into a really narrow side-ways range just waiting for anything new fundamentally to take the driver’s seat.  It appears that the 38.2% retracement at $4.18 has become an area of tough resistance.  If I was nervous and needed to get a sale on, I would be looking at $4.18; however, if planting intensions at the end of the month can get anything started I am really wanting to see $4.50 as a starting point for planted acres.

Soybeans:

Beans traded lower right out of the shoot this morning and a USDA report with notta (by notta I mean they didn’t change one thing, not domestic, not world supply) single change did very little to rally the troops.  With a stronger dollar and slower exports you would expect US carryout to increase.  This will be a looming cloud as we wait and work toward planting intentions on March 31.  They will also release the March 1 stocks numbers that day, which most expect newly found acres and increased stocks.

With no changes to the US balance sheet, the fate of our beans lies in S. America, most importantly, logistics.  If they continue to struggle getting beans to port or with slow farmer selling we may be able to justify some out of season business staying with the US.  For this reason whispers of trucker and dock strikes may bring some short-term volatility to this market.

Technically all three indicators in the old crop continue to be bearish.  We had a sell signal issued on March 4^th- somewhere near the $10.00 futures mark, hopefully some of you got sales off in that area.  Current support would be at the low of the move around $9.62.  If that would fail to hold we could see this move all the way back to $9.30.   $10.15 would be my next target to get some old crop sales off at.

As for the New Crop, all three indicators are also in full bear mode.  We had a sell signal issued on March 4^th (just like we did in corn) that would have been right around the $9.80 level.  The stochastics have been screaming to an oversold leveI at traders are keeping a risk off attitude. I believe it’s going to be harder and harder to find opportunity in New Crop beans, unless we get a surprise in the planting intentions later this month.  $10.00 is our first level of resistance, and I would be looking to put some bushels on in that area.

Wheat:

Wheat trade was nearly all supportive today with concerns about dryness in the US plains and in Russia as winter wheat crops start to emerge from dormancy.  Looking to the futures, predictions of a dry summer in the Northern Plains and Canada could be offering some support.  In fact, unless Putin decides to do something else outrageous, weather is probably the main driver from the point up to harvest.

Total ending stocks were not adjusted much today with Spring Wheat up 5 million bushels and Durum wheat down 6 million.   World stocks were left unchanged at 724.8 mmt.  Overall, the USDA didn’t give us anything real earth shattering or unexpected.

As of tonight’s close 2 of three indicators are once again bullish Minneapolis May Wheat.  We closed above the moving average and the stochastics are appearing to pick up some steam.  The MACD has not yet giving us a buy signal, but is coming together.  With that said, if I was sitting on some binned or DP spring wheat I would be looking to put offers in at $6.00 futures.  Basis is coming together as we would seasonally expect right now, so be on the lookout for opportunity.

In the Kansas City, the May futures are in full Bull mode – Yeah, especially a good deal after putting a contract low on March 5^th.  As we come up off the bottom I would be looking to make sales at $5.69 and $6.20 respectfully.