Grain Market Overview March 9
March 9, 2016Grain Market Overview March 16
March 16, 2016Commodity Market News March 14
Summary
The big news of the week was the March 10th pre-market ECB announcement that it is dropping rates to 0% which initially pushed the US Dollar higher but that was apparently a head fake. The rally lasted about an hour post the announcement, followed by a precipitous fall for the balance of the day. The balance of the week the USD would inch up marginally. During the announcement ECB President Mario Draghi indicated that additional quantitative easing (QE) was unlikely.
CONAB increased their Brazilian Corn estimate to 83.5 MMT. US Corn sales posted another solid week coming in over 1 MMT at 1.1723MMT. This was the 2nd best total of the year. Trade estimates had ranged from 800k to 1.2 MMT. It is currently at 69% of the USDA export total.
US Soybean sales estimates ranged from 400k to 700k MT. The actual number was at the low end of estimates coming in at 475k MT. That was the lowest sales total year to date. It is currently at 93% of the USDA export total.
US Wheat export sales were pretty much in the middle of trade expectations. Expectations ranged from 200k to 500k MT with Friday’s number coming in at 330.6k MT. it is currently at 87% of the USDA export total.
The WASDE Report that was issued on Wednesday offered very little changes. There was a trucking strike that was organized in Brazil but it ended up not amounting to any real disruptions. Also, Brazilian Soybean premiums surged last week, despite a growing cargo ship line up. Ship line ups are looking to run about two months behind.
Egypt replaced the head of their quarantine agency in what was thought to be an effort to restore the confidence of the global markets of their willingness to accept tenders. Now, Egypt’s Ag quarantine chief is saying the country will maintain a zero tolerance for Ergot until legislation is passed which is a change from the Ag minister’s prior statement stating that .05% ergot would be allowed.
Corn
The March WASDE report left the Corn ending stocks unchanged at 1.837 BB. Corn exports are running almost one month behind last year's pace. The Corn trade is currently looking ahead to the Corn planting which starts soon.
May Corn was up 6 3/4 last week and December Corn was up 4 3/4 cents. Market cycles continue to point higher. We are looking at a timeline of late March to early April for price to continue in a slow steady advance at which point we believe that prices will decline into the late Spring or early Summer.
For the May contract we have 373 3/4 as the next key level of resistance, which is one level away from the 369 point of control. Both of those levels should play a pivotal role in the price action in the coming weeks. The corresponding levels for the December contract are 378 3/4 and 391. The March 4th time line produced a very clean low.
May 2016 Corn Charts
Soybeans
The March WASDE has a history of not causing much price movement when it is released and last week did not disappoint. The Soybean 2015-16 ending stocks were changed from 450 MB to 460 MB and the production forecast was only slightly adjusted. The Soybean exports are running a few weeks behind last year's pace.
The May contract last week was up 17 ¼ cents last week (1.96%) and the November contract was up 15 ¾ cents (1.77%). Soybean futures are overbought and are very close to major resistance. Additionally, our cycle time line suggest that we could be looking at a top this week that would lead to a steady decline for the next 6-8 weeks. Beans have been on a tear for the last two weeks but it should start a low volatility phase next week. The May contract looks to have significant resistance at the 910-920 mark and the November contract should find it difficult getting past 925. As evidence in the charts we will probably start the week under pressure since prices are all close to near-term resistance.
May 2016 Soybean Charts
Wheat
July Wheat futures went on a massive 16 cent run last week (up 3.43%). Early warm weather concerns and dry conditions made for panic short covering last week. Fund net short positions have been dropping and we will be watching to see if the trend continues. The next key level for July Wheat is the 487 to 490 range which is setting up as a potential great short opportunity. The Point of control sits at 497 3/4 for a fade between the 490 to 495 level with a stop at 505 could play out well.
July 2016 Wheat Charts
Crude Oil
April Crude traded up to and just beyond our key resistance band as depicted in the chart below. Our time line of March 11 has arrived and we like that Crude is due for a pullback that could test the 33-34 area. The next few days will confirm for us if Friday's high proves to be a significant pivot. The next time factor on the horizon for us is April 8th. We still believe that prices will eventually run up to 43.60.
Grain Market Overview October 11
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