Written by Chris Robinson
Corn: July corn settle down 7 ½ cents at $4.99 ½, which is a 2 week low settlement December settled down $4.94, also a 2 week low settlement. Corn posted its high during overnight trade, dropped a quick 7 cents in the first fifteen minutes of trade, grinded lower through the afternoon. The funds sold an estimated 9,000 contracts of corn. The mid-day weather forecast called for less rain and warmer temps, across the Northern plains and the Western Corn belt which should provide a good window of 3 to 4 days for the planters to roll. Technically, all eyes are now on a triple top at 5.21 in July and at $5.12 in CZ on the daily charts. CN dropped 13 ¼ cents, while CZ dropped 12 1/4 cents. Informa released its expected 2014/15 world corn production and it was DOWN 8 MMT’s pegged at 963.9 MMT. One week from today, on May 9th, the USDA will release a fresh WASDE report, which will give us new balance sheets for all the grains. Hedgers: No change in recommendations.
Wheat: Chicago July Wheat gained 8 ¾ cents at $7.16.00. KC July settled up 17 ¾ cents at $8.21 ¾, which is the highest settlement in 15 months. For the week, WN gained 7 ¾ cents, while KCN gained 42 ¼ cents. The KC wheat tour projected the lowest yield in over 13 years. Combine that with the Ukraine mess, and you have a catalyst for new highs. Worldwide there is still plenty of wheat, and we will see over the next month how the SRW responds to whatever Mother Nature throws its way. The funds bought an estimated 3200 contracts. Technically, KCN has resistance at $8.28 (today’s 15 month high) $8.38 and then $8.50. Chicago WN has a triple top resistance at $7.25, which is also the 9-month high posted 3/20, and tested on Thursday and Wednesday of this week. On a bearish note, Informa placed worldwide wheat production estimates at RECORD LARGE 713 MMT. The May 9th WASDE report might be the next curveball heading at the head of wheat producers and speculators. Hedgers: No change in recommendations.
Soybeans: July soybeans settled up 9 ¾ cents at $14.70 ¾. November settled down 3 cents at $12.22 ½. July beans had a busy night trading through an 18 cent range. When the pit opened, dove 12 cents lower in the first 10 minutes, then spent the day clawing back. Funds sold 1200 contracts of beans today. Informa released bearish estimates for worldwide soybean production today. 2014/2015 production is expected to be a RECORD LARGE 297 MMT which pencils to a worldwide RECORD HIGH soybean stocks north of 77 MMTs. On the charts on 4 consecutive days this week, (Mon-Thurs) SX could not breach $12.50. Support below comes at $12.08 and then $12.00. A week from today we have a fresh WASDE report which will shed light on the old crop supply situation. Judging from the 40 cent wide trading range and extremely volatile SN/SX bull spread, a lot of traders are watching that balance sheet. SN/SX traded at $2.73 on Tuesday, melted to a low tic today at $2.31 (42 cents later) and then spun around and rallied all afternoon to settle at $2.48. Hedgers: No change in recommendations.
Volatility has been picking up as of late in the grain markets. The weather uncertainties as well as the situation in the Ukraine are giving the market’s 24 hour gyrations. Today the US unemployment figure came out as it does on the first Friday of each month. While the rate fell to 6.3%, the lowest in 5 years, this was considered hollow by many due to the record high number of folks not counted as unemployed because they have left the work force. This figure was a staggering 92 million people.
As the markets were digesting this data, the Russians called for an emergency meeting at the UN. Some believe this might be the final step before a full scale invasion. Geo-politics such as this have potential shock waves for commodities. Investment flow into commodities has supported the recent rally to multi-month highs in the corn, wheat, and beans. Sunday night it will be interesting to see if it’s Mother Nature impacting the direction of prices, or Mother Russia.
Have a great and safe weekend.
CER