GOOD MORNING,

The market's losses yesterday found many looking for an explanation.  With fundamentals not changing much, would have to consider that the break on the board was actually an across the day commodity selling event.  Not only were Ags lower, but so were many other commodities including metals, energies, and equities.  The fan-favorite trade has been long commodities against a short US dollar.   The higher US dollar has prompted liquidation in that trade, creating pressure across the board.   The severity of the break caught many traders off guard, and weaker tech signals created an end-of-month, end-of-quarter liquidation push. 

The markets reached new lows overnight but also stabilized in the PM session on short-covering, pricing, with some in the mood to bargain hunt.   Spreads were firm as cash markets trade higher reflecting tightness.  Bullspread activity remains active, with nearby corn inverses moving back towards recent highs.  

The March 1 stocks report and Planting Intentions are out at 11:00 central time.  These are market movers.  While acreage numbers are the focus of today's report, the catalyst for a move of size may come from the quarterly stocks data.  There are advertised ideas/chatter that the USDA may find bushels, perhaps 50 mln bu beans and 300 mln bu corn, that it did not count from December since it was in transit.  While the extra bean bushels could be crushed, extra corn bushels could produce some resistance.  Stock estimates are extremely wide.  Here are the stocks guesses:

Beans:  1.537 bln bu (crushers still scramble for beans)

Corn:  7.750 bln bu (ethanol production was light for Q1, quarterly hogs and pigs showed less animals, and poultry data had less eggs set)

Wheat:  1.250 bln bu

Acreage guesses:

Corn:  93.2 mln acres

Beans:  89.9 mln acres

Wheat:  44.7 mln acres

The market is anticipating a higher acreage number, so the question now is just by how much.  Last year's corn acreage number at 97 mln was a stunner. There is also little correlation between the Intentions Report and final acreage numbers.   We will know a lot more at 11:00 Central time.  In the meantime, what we do know is that the current price action may now factor in bearish numbers.    

WEATHER

--US weather for the month of April appears to be non-threatening, suggesting that the planting pace will be timely. The next 10 days are going to be dry and warm across the US, but the long term outlook appears benign.  

--Brazil's weather remains dry, which could impact the Safrinha crop.  Traders will be keeping an eye on this situation.  

ANNOUNCEMENTS

Brazil's Deral estimated 88% of Brazil's Parana bean area has been harvested as of March 29, which was 13% higher than week ago, and against 85% year ago.  

Ukraine's government moved to ban imports of Russian wheat and sunflower oil. 

Ukrainian wheat prices hit 5-month lows due to limited demand from exporters and a global downward trend, according to APK-Inform.  

Pork exports from the EU are expected to remain close to the record in 2020, as Asian countries continue to feel the impact of a pig epidemic disease, according to the EU Commission.  

CALLS

Calls are as follows:

beans:  8-10 higher

meal:  1.00-1.30 higher

soyoil:  80-90 pts higher

corn:  mixed

wheat:  steady

OUTSIDE MARKETS 

A still higher US dollar, which trades up to 93.43, and a congesting market in crude around $60/barrel.  

TECH TALK

• May soyoil tests major trendline support which was located at the bottom of the market at 5022c.  The ADX is still at a strong 47 increasing the chance of a still better bounce.  Since the low is at a major uptrend line intact from January, think it's probably good enough to sponsor a nice rally from 50c-54c.  The bounce this morning is a healthy one, confirming that 50c may in fact be too low.  If needing to price, this is still a good opportunity to do so.  
• May meal prices caught in the middle of a down-trend channel, with lower support at $389.00 and top of channel crossing lower at $406.00.  Any move above the down-trend channel will create a larger rally, but would note that the down-side has stalled.  WIth soyoil at its low, however, the meal chart still has much to prove that it can rally above $410.00.  If soyoil rallies, look for meal to find pressure.  
• May bean breaks uptrend lines and moving averages, though price action is confirming this morning that the selling was perhaps too aggressive.  The chart has made room for higher acreage and bearish numbers by factoring it in with the break to $13.64.  Look for more congestion trade from $13.65-$13.95 into the report.  
• May corn prices trade to key support at $5.37 with best lower support at $5.30 now.  The 50-day moving average at $5.42 now serves as resistance, though prices are trading an inside day so far.  If needing to price, $5.30 is still the very bottom of the market and a designated value level.  Dec. corn is attempting to use the $4.50 level as value as well, having broken through $4.60.  
• May wheat prices form resistance from $6.15-$6.20, as it tries to hold on to current lows at $6.00.  A cycle low would come from a trade to $5.98 1/2 traded last December.  If prices go there but cannot stay under $6.00, would cover a short and look to possibly go long.  Think we may test $5.98 at the open.

MAY CORN

The market has been nicely defined in a sideways congestion zone from $5.30 - $5.60.  Falling outside of this zone means you can probably tack on the same 30c congestion size to the top or the bottom of the market, whichever way it breaks out.  THe market is trading along the upper portion of its recent range, so a trade below $5.30 suggests that we see a target low of $5.00-$5.12.  The trend remains weak at 17, with an RSI at 50% meaning the market is neither overbot nor oversold.  Resistance does look a touch stronger than support, with $5.55/$5.58 very good resistance.  The report could maintain the current range, but trade outside of this locked and loaded pattern will set the trend into the month of April.  If needing to price, may want to get something on the books before the report, and if there is a bearish reaction scale- down price.

TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America