THE OPEN
May beans: 9 lower
May meal: .70 higher
May soyoil: 80 lower
May corn: 1 lower
May wheat: 3 3/4 lower
Prices opened lower with more liquidation into the report tomorrow. The higher US dollar and the slower demand pace from China, along with a break-down in technicals, turns prices lower. Sharply lower soyoil futures trade triggers technical selling in beans. The soyoil price direction was on the coat-tails of a sharply lower overnight Chinese market, followed by sharply lower palm oil prices. Seasonally, palm oil supplies grow in the month of March, as may have been the case.
Funds are selling wheat as a hedge against length elsewhere on the board. Cash trade is steady-to-lower at the Gulf for both corn and beans. The market was not impressed with this morning's corn sale. As losses deepened, it became clear that lower prices were courtesy of charts moving below moving averages and key trendline support levels.
SOY
- The soy complex opened lower with beans placing a new low for the move down on better weather in SA and weaker soyoil trade. A slower pace of buying out of China which has resulted in falling Brazilian premiums.
- Reduced demand for vegoils from China and India resulted in lower palm oil prices, and the combination of this and mixed energies sends May soyoil below 52c, triggering more sell-stops and a further correction in oilshare. July oilshare falls below 38.0% to 37.72%, while crush trades back below 50c/bu.
- May beans broke visual trendline support at $13.80, with Nov beans trading under its 50-day moving average at $11.97 to new lows of $11.85 3/4. May soyoil futures appeared ready to stabilize at first, but found more selling once prices traded under 51c to new lows for the move down from its ctr high posted last week at 5825c, locking down the limit.
- May meal enters continued congestion as traders buy meal/sell soyoil, with this market largely ignored.
- Canola prices break trendline support which crossed at $755.00 which triggers more fund liquidation and a trip below the 50-day moving average at $731.00.
- Spreads are weaker as well, with July/Nov beans trading to 1.75 1/2c inverse from 1.82 1/4c, though May/July firms to 9 1/4c from 7 1/4c. July/Dec meal inverse falls to $27.30 from $30.50, posting a new low for the move down.
- At midday, the stampede for the exit by the bull continues, as prices attempt to find pricing orders that will stem the flow downward. Weak soyoil prices continue to dominate the soy complex, impacting beans the most.
GRAINS
- Grains started the day weaker and continued to head lower led by wheat. May wheat futures tumbled after the open as traders sold against the high of the PM session, as chart-wise it puts in a third bounce which was sold by funds wanting a hedge against length elsewhere on the board. May wheat breaks trendline support at $6.07 which creates a vacuum trade down towards the $6.00 benchmark, while July breaks through $6.00. Kansas City wheat prices traded back towards recent lows at $5.58, and posted another lowo at $5.56 1/4.
- May corn has little choice but to follow its neighbors, as funds remain longest here. May corn trades back below $5.40 triggering sell-stops under $5.37, with December corn futures taking out its 50-day moving average of $4.55 which drops prices to new lows of $4.49 1/2. Funds continue to sell corn into good scale down commercial pricing activity, which holds values better as it descends lower.
- Corn spreads are firmer with May/July inverse trading up to 16 1/4c, as July/Dec firms to 72 1/2c from 69 1/2c.
- At midday prices are still under pressure as the fear of a bearish report continues.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
May beans: 24 lower 13.94 3/4 13.66
May meal: 1.10 higher 400.70 397.20
May soyoil: 2.50 lower 53.19 50.46
May corn: 8 1/2 lower 5.47 1/2 5.33 3/4
May wheat: 11 lower 6.16 3/4 6.00 3/4
May canola: 29.40 lower 758.80 726.20
OUTSIDE MARKETS
The Dow opened down 23 pts, but extended losses by 125 pts. Crude oil trades down to $59.94/barrel, and the US dollar trades up to 93.35.
CLOSING COMMENTS
A larger shift in price action is taking place into tomorrow's report, where fund selling has ruled the last few sessions. It is also the end of the month and the quarter, which may leave the market over-extended to the downside. If the acreage numbers are not as bearish as expected, and stocks bullish, prices could find some lows. There are some ideas that the number of total acres could be higher than the average trade estimate. There is also talk that NASS could revise stocks lower for beans, but higher for grains. Speculation abounds on both sides.
A number of things would have to happen for the current tops that are in, which includes a higher US dollar and funds selling out 2/3rd of their positions on a major fundamental shock. The first item is in place, as the US dollar continues to strengthen. Fund selling has occurred, but it probably does not even approach the halfway mark of fund length in beans, meal, corn, or soyoil. And the third point, a fundamental shift, will be known tomorrow.
Technically, this is one of the worst performances as funds react to broken moving averages and trendlines. The market has been ratcheted lower across the board, with all trading ranges moving down. If the report is extremely bullish, look for a confirmation of trading ranges from these new lows today heading into the growing season. Stocks are still tight, and that means that prices today could prove to be good values for tomorrow and beyond. Today's break in prices makes room for a bearish report, and perhaps what may be a sell-the-story, buy the fact day tomorrow. If short, would still cover something in or price if needing to. If wanting to get long down here, could afford to see what the gov. offers up tomorrow.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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