Written by Chris Robinson
Corn: July corn settled up 11 ¼ cents at $6.52 ¾. December settled down 4 -1/2 cents at $5.19 ½ which is an 11 month low settlement. For the week, CN gained 16 ½ cents while CZ dropped 10 cents. The market today was fueled by traders buying July and selling December. This spread has popped since the May futures went off on Tuesday. That spread gained 16 cents today and settled at $133 ½. Five weeks ago, it was trading at 77 cents. This is a graphic result of old crop tightness and perceived new crop weakness. Informa today pegged corn acres at 96.827 million acres vs. USDA at 97.3. For the most part, this reduction was taken in stride as a non-event. Monday at 3PM we will have an update on planting progress. Technically, CN still has resistance above at $6.69-6.76 gap. Support for CN comes at $6.37 ½ and $6.25. New crop however, is an entirely different story. Today’s low at 5.17 ½ came within a ½ cent of the 11-month low posted back on 4/24/13. Below there, we still have 5.11 as the 26-month low beckoning to the Bears. Above, that 3 year old trend-line on the weekly charts remains in-tact as a beacon for the perma-bulls. This week’s intersection comes at $5.63, 43 cents away from today’s settlement.
Wheat: July wheat settled down 4-1/2 cents at $6.83 1/4 which is a 1-1/2 month low settlement. For the week, July lost 21 cents. MNN settled down ¼ cent at 803 ¾. KCN settled down 6-1/4 cents at $6.83 ¼. Informa came out with Spring Wheat acres down to 12.401 million acres vs. the USDA at 12.7. All in all a non-event for the market. Wheat has turned up its nose at every bullish bit of information for the past 5 months. Drought, freeze, hail, a lower yield estimate from the wheat tour.. All failed to give US wheat farmers a decent recovery rally to sell into. With today’s action, WN looks poised to run down for a test of the April 1st low at 6.64 3/4 and then 6.61 which is the 3 year low posted back on November 25th, 2011. The upside resistance in WN remains at $7.37 which has held up as a wall of resistance for the last 3 months. .
Soybeans: July settled up 21 cents at $14.48 ½ which is the highest settlement in 2 months. November settled up 10 ¾ cents at $12.28 ¼. For the week July gained 49 cents while November gained 23 cents. The July/November spread settled up at $2.20 ¼ which is a new life of contract high. It eclipsed the last high from September 2012, posted 8-months ago at $2.14 ¾. On April 1st, this spread had been down at $1.10. This spread graphically shows the tightness in old crop and the relative weakness in new crop. The money flow is betting on this spread, and therefore we need to pay attention to its movements as marketers. Informa pegged bean acres at 78.206 million acres vs. the USDA at 77.1 million acres. This reflects what most in the trade have been looking at as acres in the Delta moved from corn to beans. July has resistance above at $14.63 and the $14.75. Support remains below at $13.50. In November, resistance comes in at $12.37 and the $12.50. Support remains at $12.00 and then $11.86 ½ which was the 11-month low carved out on April 24th, just 2 weeks ago.
Given the 11-month low settlement in CZ we saw today, one thing seems painfully evident. Next week’s trade will go a long way in determining who was “right” or who was “wrong” in their opinion on December Corn price direction. No matter what price action we get, Top Third clients are poised to take advantage of it. If we rally CZ back 60 cents on a rally, our clients will have the choice to sell grain and take advantage of that rally. Conversely, if we get a panic sell off down to the $5.00 level or lower, our clients will be getting cash in their accounts as their paper hedges pay off. That’s the key to balanced marketing. Disciplined and balanced wins the race over the long run. We here at Top Third are looking at the long-run for our clients. That’s why on Monday when we get that planting progress report at 3PM, our clients won’t be panicking one way or another. Our protection is in place. Can you say the same? Have a great and safe weekend.