Grain Market Chatter Closing Comments 03/23/2015

Craig’s Closing Comments

March 23, 2015

Since Crude and the dollar tend to me the major drivers of our commodity trends of late I thought we’d take a look at crude stocks and what is pressuring that market.  Crude Oil stocks have been rising for the past 15 straight weeks.  This an all time high.  However, after we peeked out the storage utilization in March of 2011 – Cushings added on.  We now have room to hold another 16.4 million barrels.  So even though we are storing oil like never before, we still have room to store more.  The excess oil is keeping crude futures under pressure.

Corn:

Corn had some follow-through strength from Fridays’ action and posted another gain today, up nearly $0.17 in two sessions.   The market action appears to be a function of the funds getting too short, too quick and that has made them hastened buyers.   The Liquidation of long dollar/short commodities appears to be the main course. 

Export inspections today were out at 994,666 Metric Tons at the high end of the trade guess.  Impressive, actually when you look at the Chinese stats.  95% of their February corn imports came from the Ukraine, now 3x the corn bushels they bought from the Ukraine same time frame last year.

We are also watching the corn/bean spread as that continues to weaken, now at 2.33 and favoring beans.

Technically in the May corn, we have all three indicators in bullish mode for the time being.  We closed today just off of resistance of $3.93.  So here we sit at a pivotal point.  Making sales here would be a nice catch up sale if you have been holding on to binned bushels.  Basis has come together nicely and we have made a 61.8% retracement to this point.  My next target level would be $4.11 (or just a little shy) as this was 31.8% retracement from the major down move last summer, the level above that $4.26.

Soybeans:

We managed a strong day on the coat tails of a weaker dollar and money flow as funds cover some of last week’s fresh shorts behind today’s rally.  Producer selling remained quiet early but did pickup as we reached some technical levels and this softened the market into the close.  We may see some day-trading creating softness in this market as they try to take profits in anticipation of ‘Turn Around Tuesday’.

Weekly exports this morning were right in the middle of the trade range at 519,464 Metric Tons.  Not a bad number considering tis the season for the business to move south.  We are now running 89.6% of the USDA estimate and need to average 213,722 mt per week to meet the USDA forecast.

Everyone is keeping one eye on S. American weather as rain continues to interrupt field work in Easter Mato Grosso.  Some quality issues may start to be a factor.

Technically, as of the close, two of three indicators are in bullish mode.  We traded above the 10-day moving average for the first time since March 3^rd.  The May contract closed just off of resistance at $9.90.  Just as in corn, if you have been sitting on binned bushels and needed to play some catch-up this is not a bad place to do it.  Basis has not exactly been our friend, so we would be looking to price bushels in the March.  And, supply is probably not our friend this year as we look forward as basis levels are not strengthening in the forward months. If you feel you need to hold on a little longer I would be looking at $10.10 as my next target.

Wheat:

After posting overnight highs the Minneapolis market traded the balance of the day session on the defense.  Winter Wheat markets were firm throughout the session but couldn’t muster an inter day high to match the overnight session.  Weakness in the dollar appears to be the main driver in these markets. 

Weather continues to be a concern as they remain dry in the southern plains winter wheat country through the week while the main SW areas regions are expected to stay damp.

Exports today remained steady at 511,069 mt vs. 519,592 last week. 

Technically, all three indicators are once again bullish with the close for both the Minneapolis and Kansas City nearby contracts. .  Just as in corn and beans, we ended the day just off of key resistance of $6.00 in the Mineapolis.  In both markets, the stochastics have made it into over-bought territory and are trying to issue a sell signal.  The next levels of resistance are $6.16 and $6.32 in the Minneapolis and $5.89 and $6.12 in the Kansas City.