THE OPEN
May beans: 13 1/4 higher
May meal: 5.00 higher
soyoil: 67 higher
May corn: 1 higher
May wheat: 5 higher
Prices opened as expected with a cautious air from opening values given excellent planting weather for the month of April. May corn collapses, trading lower, while oilshare finds its footing as traders buy soyoil/sell meal. Traders buy wheat/sell corn as corn becomes the apparent sell leg of spread action today vs. wheat and beans. Meal prices find some weakness on continuing concerns over ASF. Reuters published an article quoting a source that sow stocks in northern China were 25-30% lower in the north from Feb. to March due to the latest outbreak of ASF. The flash sale of wheat provided a catalyst for the buy wheat/sell corn spread trade. The sale to "unknown" for SRW is largely expected to be China as a final destination.
At 10:00 export inspections were as follows:
beans: 298,252 mt vs. 439,930 mt week ago
corn: 1,912,211 mt vs. 1,720,251 mt week ago
wheat: 594,0321 mt vs. 306,579 mt week ago
Inspections were low end for beans, neutral for corn, and good for wheat as lower prices may have sparked some demand. The marketing year corn export shipment pace to date exceeds the seasonal pace needed to hit USDA's target by 106 mln bu vs. 88 mln bu week ago.
SOY
- The soy complex opened into a higher oilshare trade and more consolidating trade for beans, meal, and soyoil. Meal values trade lower from higher, following the path of weaker corn trade. July crush trades to 57c/bu while oilshare trades to 38.29%.
- May beans gained on Nov, but both markets seemed to be in the process of defining new trading range lows, of which both are higher than before the March 31 report. November bean prices consolidate from $12.65 to recent contract highs at $12.85, but remaining close to contract highs is friendly price behavior. Look to test contract highs again in all likelihood, as beans have to stand tall against corn in the event that April planting is ideal.
- May meal prices collapse but still finds support at key support at $405.00, while May soyoil prices congest from 52c-53c, with the potential to trade higher. Spreads are firmer with July/Nov bean inverses finding strength and new buying interest from 1.26 1/2c to 1.40 1/4c, while May/July inverse trades from 4 1/4c to 6c. July/Dec meal inverse trades all the way down to $13.20 from $17.80.
- Would look for November beans to find support on any push towards the $12.45/$12.50 level, which was resistance but now becomes key support. Given the bullish acreage report, think that Nov beans at $12.45 would become a key buying spot, along with 52c May soyoil and $400.00 May meal.
GRAINS
- Wheat prices push higher today against corn on the surprising announcement of SRW to a destination defined as unknown, but potentially China. Egypt is also in for wheat, as prices may have found the level of support to entice demand.
- Chicago wheat is firmer against KC, the latter of which found pressure from recent rains in the last several weeks. May corn collapses from the morning high of $5.64 1/2 as spread trade continues.
- May/July corn inverse trades from 15 1/2c down to 12 1/2c, while July/Dec trades from 55 1/2c down to 48 1/4c.
- Wheat gains on corn throughout the session with July wheat/corn trading from 64c up to 76 1/4c. Funds are caught short wheat, creating more buying activity during the session, pushing May towards major resistance located at $6.31.
- December corn prices remain firm, with new contract highs at $4.93 1/2, pushing up against trendline resistance for the day. PM trade for Dec corn was right against trendline resistance, which could make it more difficult for higher trade technically. Look for back and fill prices to find support in corn, while wheat rallies may attract more sellers.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
May beans: 12 higher 14.21 14.05 1/4
May meal: 2.60 lower 417.90 406.20
May soyoil: 43 higher 53.15 52.35
May corn: 7 lower 5.64 1/2 5.49 3/4
May wheat: 5 higher 6.25 6.07
OUTSIDE MARKETS
Outside markets remain firm with the Dow up 250 pts, and crude oil trading down to $59/56/barrel. Energies weaken with the big holiday weekend now in the rear, and Memorial weekend well ahead of us. The US dollar weakens throughout the session to 92.54.
CLOSING COMMENTS
NASS will publish crop progress this afternoon which includes corn planting progress. Bean plantings will be updated in two weeks. US weather offers up some rainfall that could disrupt fieldwork from time to time, but warmer temperatures have now suggested that corn will get off to a good start for the month of April.
The latest trading ranges and market behavior is net positive for trade and would expect our new contract highs in Dec corn and Nov beans to likely be tested. Domestic basis levels are firm which continues to suggest that supplies are tight. The market is still digesting the March 31 acreage numbers, and pullbacks will see support. The technical implication of staying over $14.00 May beans and $12.45 Nov beans suggests prices build on gains, while Dec. corn could target $5.00 given time. It may take a bit, but think we get there. Wheat remains a follower, but it does what wheat does and knocks out recent shorts.
Technically the lack of follow-through to the upside is troubling, though prices did jump from severe losses into the March 31 data. Most of the funds have reduced their long positions except in corn, which could have contributed to today's weakness.
The WASDE report is around the corner on April 9 at 11:00 central time. Traders expect that both corn and bean carryout may be lower, but wheat changes are expected to be minimal. Wheat rallies but may continue to be on the defensive as production levels in Russia remain high, and their export prices lower. Feels like traders are not willing to add to long positions until they 1. see the pace of crop progress and 2. see what the April report has to say.
Look for the trading ranges to continues as such:
May corn: $5.45 to $5.85, prefer to price or go long on pullbacks.
Dec corn: gap is still open from $4.77 1/2 to $4.80 3/4, look for a pullback towards $4.75 as a potential buying opportunity for a market that could test $5.00/$ 5.05 – bu.
May beans: $13.93-$14.50, prices consolidate but would prefer to own pullbacks towards $14.00 for a potential trade back towards $14.50, using $14.25 as a pivot point.
Nov beans: $12.45-$12.85, new ctr high, but would prefer to own a pullback towards $12.40-$12.45 should we go there.
May wheat: $5.90-$6.30, would prefer to sell rallies here as it remains a follower of other markets.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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