Grains Wait for Tuesday’s USDA

Written by Chris Robinson Corn: May corn settled down 4 ½ cents at $3.86. New crop CZ settled down 3 ¼ cents at 4.10 ¾. For the week, both CK and CZ lost 7 ¼ cents. Corn posted its high in the overnight market and then trended lower all day, despite a brief 3 cent bounce into the close. No new fundamental news hit the grain market today as we continue to await the USDA on Tuesday. The trade is not expecting any big fireworks or adjustments with the average analyst guess for the US carry out of 1.826 billion bushels. The February USDA was at 1.827 billion bushels. World ending stocks are expected to be 189.67 mmt vs the USDA February number at 189.64 mmt. Worldwide carry out is 7 billion bushels of corn, of which the US represents ¼ the of that total. The funds remain long 87K contracts of corn. Corn flat price has been mired in a 15 cent trading range for the past 5 weeks. Longer term, we continue to edge towards the apex of the wedge or triangle formation. For a better understanding, take a look at this chart. A “break out” from this formation might be the catalyst for their next bet. Hedgers: No change in recommendations. Wheat: May Chicago Wheat settled up 2 cents at $4.82 ½. New crop WN settled down 1 ¼ cents at a new contract low settlement. For the week, WK dropped 30 ½ cents and WN dropped 25 cents. These are the lowest prices we have seen since 2010. KC was the lone “bright spot” here as it settled up 5 ¼ cents at $5.22 ¼. Given Thursday’s contract low down at $5.16 ¼, it’s hard to see how a 6 cent bounce is a victory, but the bulls have to take what they can get. The fact remains that the funds are now short 45K contracts of wheat, selling approximately 8K contracts alone on Thursday. Another 11 ½ year high in the US dollar, combined with a plentiful worldwide supply of wheat continue to weigh down any bullish ideas. The average analyst guess for US Ending stocks is 701 million bushels vs the February USDA 692 million bushels. The average estimate for worldwide wheat stocks is 197.69 mmt vs. February’s 197.85 mmt. Worldwide, that’s 7.2 billion bushels carry-out, of which the US accounts for just 10%. Hedgers: No change in recommendations. Soybeans: May Soybeans settled down ½ cent at $9.85 which is the lowest settlement in 1-month. New crop SX settled down ¾ cent at $9.65 ¼, also a 1-month low settlement. For the week Soybeans dumped 46 ¾ cents. The trucker strike in Brazil and the rain delay in harvest which gave us that gift-wrapped rally last week had zero follow through for the bulls. Instead, South American farmers choking on the 11 ½ year low in the Brazilian Real has those producers wisely stepping into sell the rally before their currency lost more relative value. Tuesday will give us fresh US and worldwide supply and demand data. The average analyst guess for US carry out is 376 million bushels vs February’s USDA figure at 385 million bushels. Worldwide, the average guess is 89.47 mmt vs February’s USDA figure at 89.26 mmt. Worldwide carry out for beans is just north of 3.2 billion bushels, of which the US represents just 12%. This week saw SK post a 2 month high Monday at 10.39, only to be met with today’s 1-month low $9.76 ¾. Managed funds are estimated to be short 19K contracts of beans, while still long approximately 25K contracts each of soymeal and soy oil. Hedgers: No change in recommendations. The table is set for the USDA on Tuesday. Make sure you are properly covered given the risk at hand. The move in beans this week from a 2 month high on Monday to a 1-month low today, as we swung through a 62 cent trading range should be a warning flag to producers and speculators alike. Increased volatility demands increased attention to market risk and reward. Have a great and safe weekend. CER

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