February 27, 2015 Written By Chris Robinson Corn: May corn settled up 4 ¼ cents at $3.93 ¼. December corn settled up 3 ½ cents at $4.17 ½. The Spring Insurance price is $4.14 ¾ which is the average of the closing prices for December corn for the month of February. For the week, December gained 1 ¼ cents, while May corn gained just ¼ cent. Bulls were supported by some worries that the rain is hampering the Safrinha corn planting in Mato Grosso and central Brazil. The trucker strike snarling the roads is also delaying the delivery of fuel, and this could slow planting further. Time will tell if this is a real issue, or just a bull-trap in a bear market. Technically, corn is back near the top of its 8-week, 25 cent wide trading range, bounded by $4.00 resistance and $3.75 support. A break out above would run into resistance at $4.11 and then again at $4.25. For new crop CZ, the boundary is $3.98 support and $4.23 resistance. December corn continued to move toward the apex of the triangle formation on the daily charts. The funds entered the week long 70,000 contracts, and remain the major wild-card for the corn other than the US dollar and Mother Nature. A settlement above $4.25 or a settlement below $4.05 could signal direction for the next several weeks. Since a picture is worth a thousand words, please take a look at the following link. http://www.topthird.com/images/cz15.png. Hedgers: For unpriced 2015 bushels, consider a May dated new crop $4.00 put for 7 cents a bushel. Set your floor for the next 55 days, but keep the upside completely open. Wheat: May wheat settled up 12 ½ cents at $5.13. July new crop wheat settled up 12 cents at $5.16 ¾. For the week, May gained 7 cents, while July gained 5 ¼. The spring insurance price for HRS is $5.85. The funds entered the week short 35,000 contracts and were rewarded with a re-test of the contract low in May wheat on Thursday. The low tick was $4.89 ¾, while the contract low posted in September was $4.89 ¼. Today’s bounce could be just month end profit taking. Monday and Tuesday of next week should give us indication if the funds are going to give oxygen to the bulls with some more short-covering, or if they will simply re-load their “sell” ordinance. European wheat remains cheaper and moved lower as of today’s offers. The 11 year high in the US dollar versus the rest of the world’s currencies is a difficult weight to bear for our wheat exports. Hedgers: We were able to roll down deep in the money puts once again this week prior to the bounce. Soybeans: May soybeans settled up 5 ¼ cents at $10.31 ¾, which is the highest settlement in 7-weeks. November settled unchanged at $9.97 ½, which is also a 7-week high. For the week, May gained 29 ½ cents and November gained 17 ½ cents. The spring insurance price for new crop beans is $9.73. Although the Brazilian government thought the trucking strike was settled, apparently “wildcat” striking truckers in Southern Brazil didn’t agree… The continued strike is slowing not only grain movement, but other commerce (food and fuel). The harvest is near 50% near Mato Grasso. Yield reports are better than expectations. Some talk of rust issues surfaced today, but the big picture remains one of a record crop. Some worried that if fuel didn’t arrive in the next 72 hours, then harvest would stop. We here at Top Third view this as a great marketing opportunity and advised selling an additional 10% of guaranteed 2015 bushels, getting us to 35% sold. We have now bounced 64 cents from the January 30th 4 ½ month low down at $9.40. Hedgers: Consider a May dated $9.50 put for less than 13 cents a bushel. This covers you through the next two USDA reports (March 10, and March 31). Remember, we want protection against lower prices, while keeping the UPSIDE COMPLETELY OPEN. We finished the month near the top of our respective trading ranges for corn and soybeans. Wheat re-tested its contract low Thursday, and snapped back 23 cents from that low. Barring any fundamental changes, the supply and demand picture is well known. The American farmer’s lot is thrown in with the managed funds… The funds are long corn and beans (not to mention the soymeal and the soy oil). They are short wheat. The spring insurance prices are now known. The table is set for an interesting March. Let’s hope the only madness we’ll see is during the NCAA Tournament. Have a great and safe weekend. CER
