Market Thoughts by Marc

Keep Up with the Markets

April 28, 2017

For the week ending 4/28/17
Corn UP 1 – cent     Soybeans DOWN 5 ¾ - cents    Mpls Wheat UP 14 ¾ -cents
Crude oil DOWN $0.29 -Bl        S-P 500 Up 33.0 - points         US Dollar DOWN 98

4/28/17

May corn 358 – 4              May soybeans 945 ¼ - 4             May Mpls wheat 540 ¾ + ¾               
July corn 366 ½ -2 ¾           July Soybeans 956 1/3 -1           July Mpls wheat 554 ¾ + 1 ½       
Dec 17 corn 385 - 1 ¾       Nov17   Soybeans 953 ¼ - 1¼      Sept 17 Mpls wheat 561 + 1 ¾   

The US crop is now in its spring planting window and experiencing its first of the “TOO’s”. In the case of corn and spring wheat it has become apparent that planting is definitely not running at last year’s exceptionally fast pace. In the case of soybeans, the planting is just getting under way and is slightly ahead of last year and the average.

Last year’s early planting played a huge role in the Exceptionally high yields. With the planting delayed, as is the case in much of the Midwest, a record US yield in corn and spring wheat is not likely. Hummm – we will see on Monday afternoon what the USDA thinks.

Last week the USDA export sales for corn and beans were well above what the market was looking for. Wheat on the other hand, was very disappointing. Corn, wheat and soybeans sales should have no problem reaching USDA “sales” projections. However, if over the next 6-weeks the inspections for wheat continues to fall short of 25 mil-bu, it will not reach USDA estimates.

USDA estimates of Winter wheat conditions are currently running ahead of last year and slightly above average.

Look for Spring wheat planting to fall even farther behind last year and the average on Monday’s USDA progress report. Cold and wet conditions continue to slow producers down as they try to get going and get spring wheat in the ground. It should also be noted that wheat planting in Canada are also being slowed down by the weather. The US and Canada are the world’s largest producers of Spring wheat. Hummm – could we lose spring wheat acres to beans?

Keep in mind that wheat is grown all over the world and the US is not one of the biggest players. There have been reports of dry conditions developing in the parts of the EU as well as Russia and Africa that could reduce supply.  However, according to the last WASDE report the world has a huge supply of wheat and it will take a substantial crop problem to change that. Hummm – markets trade the idea of developing shortages and there is no shortage of wheat.

Last week the market did react to rumors about “Trump vs. NAFTA”, but in the end, it turned out to be a non-event. However, it will probably hit the headlines again at some point in the future. Hummm – Last week it produced a negative reaction.
So, what did Big Money do last week?

According to the CFTC Commitment of Traders disaggregate report, the funds increased their net short position in corn by around 25,000 contracts, wheat by 20,000 contracts and soybeans by 2,500 contracts. Hummm – still short and adding more, does not look supportive, yet.

Weekly Continuation Chart of Corn
Prices did trade down to 355 1/2, but managed to close a penny higher for the week. The corn market continues to trade in a sideways pattern that started back in January. Prices have now moved down to the bottom of that channel.

July Corn 

On Friday prices tested the support the previous low close of 363, but closed above. This remains an important support line. A close below this line would suggest a break out on the bottom side of a bear flag, a negative formation.  On the top side, there is down trend line, which is resistance, is at 3.72-3.75.

Weekly Continuation of Corn using the December Contract Only.

Prices closed higher for the week, but continue in a sideways channel.

Weekly Continuation Chart of Soybeans 
Prices traded to new recent high but closed lower for the week. It is not for as long as corn, but soybeans are also trading in a tight sideways pattern.