World Perspectives
feed-grains soy-oilseeds wheat

PM Post - Healthy Consolidation

THE OPEN

July beans:  1 lower

July meal:   .80 lower

July  soyoil:  14 lower

July corn:  5 lower

July wheat:  15 lower 

Prices opened as expected with more selling in wheat futures and oilshare.  Better weekend weather and a very important May 12 USDA report are the major catalysts for a liquidation day of trade.  The cancellation of corn seemed to overshadow the new crop sale, while wheat values traded lower.   Spreads were firmer with the corn and bean inverses strengthening.  Today and tomorrow may continue to be about position - squaring in front of the USDA report Wed, to be released at 11:00 central time.

At 10:00 export inspections were released as follows:

corn:  1,707,142 mt vs. 2,211,277 mt week ago (and vs. estimated 1,625,000 mt)

wheat:  545,587 mt vs. 532,704 mt week ago (and vs estimated 490,000 mt)

beans:  236,918 mt vs. 144,348 mt week ag (and vs. estimated 200,000 mt)

Exports were still big for corn, neutral for wheat, and low end for beans.

SOY

  • The major feature in the soy complex was that of profit-taking in oilshare, which sent meal to higher prices and soyoil values back towards major trendline support of July at 63c.    July crush traded to 84.93c/bu while oilshare traded down to 41.83%.   The soy complex trade feature was that of much weaker soyoil which followed lower palm and canola prices.  July canola placed a new contract high at $10.08 on Friday but is back and filling some of the price action today.  The RSI is flagging extremely overbought conditions with an RSI at 82% for soyoil and beans, part of the reason for today's break.  
  • Inspections for beans were as expected, and a bit higher than week ago.  November bean prices find profit-taking on better rains across the US sending prices back towards the $14.00 level, while nearby beans continue firmer.  July/Nov bean spread trades higher to 1.75 1/4c from 1.56c as buying in the spread continues from the overnight session.  
  • Meal inverses are strong as well with July/Dec trading to a new high of $25.60 from $21.30.  At midday, it appears as though July soyoil, though weak, has found better support on the break while July meal hit key trendline resistance at $444.80, and is now backing away.  November bean prices approach $14.00 with a low of $14.10 1/2 at midday but would expect to find between now and the report good support emerging from $13.90 to $14.00 should we get there.

GRAINS

  • Grains were weaker on the day as wheat futures entered into double digit losses from the open, applying pressure to corn and eventually beans as well.   Good rains were noted falling across portions of the Dakotas and the Plains, which created some initial selling, but technicals soon took over.  
  • One-to-two-inch rains were noted over eastern Iowa, Mo., Illinois, and Indiana., with extended forecasts warmer and wetter which could help to alleviate some problem dry areas.  Most of all, traders remain long everything and wheat prices had the least technical momentum higher with today's opening weakness.  
  • Corn prices continue to pull back, but AgRural's recent crop chop for Safrinha estimates of only 65.1 mmt vs. 73 mmt in April supports breaks in price action.  So despite a weaker tone via the corn cancellation this AM, prices will find fundamental support to fall back on.  Buyers were there to catch falling corn prices as funds sold into commercial scale-down pricing activity.   Corn spreads popped again with July/Dec once again trading over 1.00c/bu to a high of 1.06 1/2c.  Better weather sent Dec. corn prices back towards the $6.00-$6.10 price level which should hold, while July corn finally gives up its gains and falls towards support at $7.05.  Corn inspections were as expected, but lower than a week ago as high prices dampens demand.  There is some chatter that while China is around the US corn market, they may be looking to purchase less expensive Ukraine and Canadian products.  
  • In the export inspections report, China was the major destination for corn inspected along with Japan, the traditional buyers.  At midday grains remain under pressure, and wheat could continue to stay in a weaker tone as another system is moving across HRW areas right now.  July wheat triggers sell-stops along the way from $7.50 down to $7.35 before finding light support.  However, it is not much in the big picture.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                           HI                             LO

July beans: 4 lower                          15.93 3/4                 15.75 1/4

July meal: .80 lower                         444.80                     436.00

July soyoil: 73 lower                         64.58                       63.25

July corn:  14 lower                          7.30 3/4                   7.11

July wheat:  37 3/4 lower                  7.60 3/4                   7.30 1/4

July canola:  23.10 lower                  1001.20                   975.90

OUTSIDE MARKETS  

Stocks were up 120 pts at the open and at midday they are 280 pts higher.  Crude still posts a high at $65.75/barrel, while the US dollar trades down to 90.02.

CLOSING COMMENTS

The markets are seeing more profit-taking particularly where the most length is held, i.e. corn and soyoil.  Funds are taking positions off in front of the USDA report, and in front of a planting progress number that is expected to show that corn and bean plantings are mostly in line with expectations.  Warmer and drier forecasts are forcing some liquidation.  Advertised expectations are for beans to be around 40% complete based on ranges that range from 36 to 46%.  Corn progress guesses range center around 67% complete in a range from 62 to 71%.  Advertised expectations for spring wheat plantings to be around 69% complete in a range from 63 to 74% done.  

Grains continue to find pressure while the soy complex holds in fairly well.  Traders continue to watch the weather to see if patterns are going to return to something normal after this cool and wet pattern.    

Technically, the charts are attempting to alleviate overbought extremes, which this liquidation is helping to do today.  Once RSI's reach a more balanced 60-65%, the selling should slow and buyers return.  In the big picture, the charts have not set a top and this is healthy for the bull market trade, though perhaps not good for the wallet.  If the rally is to continue, the markets need a lower place to rally from, and hence feel this is what the mission of the market is between today and tomorrow.

July corn:  $6.90-$7.35, target highs at $7.50

Dec corn:  $5.90 to $6.00 - - 6.50 target highs

July beans:  $15.50 to $16.00, target high above that at $16.25

Nov beans: $13.90 /$14.00 to $14.50, target high $14.75/$15.00

July wheat:  $7.25 to $7.70, swing around $7.40....may want to think about covering a short scale down from $7.20 to $7.30.

 

WPI on Twitter

Related Articles

Good Friday

Tomorrow, 29 March is a holiday for the CBOT/CME markets in observance of Good Friday. Please note that our office will also be closed. The next Ag Perspectives will be published Monday, 1 April. ...

feed-grains soy-oilseeds wheat

Market Commentary: Wow, Some Fun Information!

USDA’s much anticipated Prospective Plantings and Quarterly Stocks reports had few shockers, but they did shuffle the board a bit. First, the top line stuff: Corn Planted area was expected to drop due to higher input costs and lower prices, but USDA’s 90-million-acre number was at t...

livestock

Livestock Roundup: Hogs and Pigs Report Neutral with Bearish Undertones

Today, USDA released its quarterly Hogs and Pigs report for the December through February quarter. The total inventory of hogs and pigs on 1 March was 74.6 million head, which was 101 percent of March 2023 and the highest since 2020. That was slightly higher than pre-report expectations. Total...

Good Friday

Tomorrow, 29 March is a holiday for the CBOT/CME markets in observance of Good Friday. Please note that our office will also be closed. The next Ag Perspectives will be published Monday, 1 April. ...

feed-grains soy-oilseeds wheat

Market Commentary: Wow, Some Fun Information!

USDA’s much anticipated Prospective Plantings and Quarterly Stocks reports had few shockers, but they did shuffle the board a bit. First, the top line stuff: Corn Planted area was expected to drop due to higher input costs and lower prices, but USDA’s 90-million-acre number was at t...

livestock

Livestock Roundup: Hogs and Pigs Report Neutral with Bearish Undertones

Today, USDA released its quarterly Hogs and Pigs report for the December through February quarter. The total inventory of hogs and pigs on 1 March was 74.6 million head, which was 101 percent of March 2023 and the highest since 2020. That was slightly higher than pre-report expectations. Total...

Divergent Perspectives

China doesn’t offer the best business environment for American companies and FDI has plummeted. But Xi Jinping told CEO’s that his country will continue building a “first class business environment.” Meanwhile, Joe Biden tells American companies that they are monopolies...

Image
From WPI Consulting

Forecasting developments in production agriculture

On behalf of a private U.S. agricultural technology provider, WPI’s team generated an econometric model to forecast the movement of concentrated corn production north and west from the traditional U.S. Corn Belt. WPI’s model has subsequently provided quantitative support to a multi-million-dollar investment into short-season corn variety development. WPI’s methodology included a series of interviews with regional grain elevators and seed consultants. Emphasizing outreach and communication with stakeholders who possess intimate sectoral knowledge – on-the-ground insights – is a regular component of WPI’s methodologies, made possible by WPI’s ever-growing network of industry contacts.

Search World Perspectives

Sign In to World Perspectives

Don’t have an account yet? Sign Up