Written by Chris Robinson 4/16/17 Corn: May corn settled up ¼ cent at $3.76 ¼. New Crop CZ15 settled down ¼ cent at $4.00 ¼. Corn continued to have quiet overnight trade which extended into the day session as we meandered through a 4 cent trading range. Exports remain a non-factor. Planters are rolling in the WCB and some think that central Illinois might be 50% planted by weeks end. Ground temperatures are reported to be perfect for germination and we should see normal emergence based on these temperatures. News out of South America was bearish, as Argentina’s Rosario Exchange bumped up their corn production estimate 2.2 mmt or an increase of almost 86 million more bushels. The latest estimation had the funds flat corn, to slightly long 1,100 contracts. Monday’s planting progress will be closely watched. I can’t remember a year where we have not had some type of “planting delay” story, either real or perceived, to give the bulls a bounce. Technically, CK has support at $3.70 and then $3.67 which was the 6-month low posted just 4 weeks ago on 3/18/15. Hedgers: No Change in recommendations. Wheat: May Chicago Wheat settled up 3 ¾ cents at $4.94 ½. KCK settled down 6 ¼ cents at a new contract low settlement of $5.08 ¼. MWK fell 8 ¼ cents to a new contract low settlement of $5.35. For both hard red and spring wheat, we have returned to prices not seen since 2010. Chicago posted a new 1-month low, but did not test the contract low posted 5 weeks ago at $4.78 ¼. KC has collapsed 84 cents or 14% in 8 trading days, shunning the 4-month high posted just two Monday’s ago. Exports this week were at a marketing year low. The high US dollar continues to make our wheat the most expensive on the planet. The funds are now short close to 100K contracts. Ethiopia was in the market today for wheat. We’ll see if the US can get some of that business. Russia is now talking about lifting its export tax on schedule June 30th; however, it would not be unusual for them to play with this announcement to try to generate knee-jerk rallies which they then use to price their own grain. Hedgers: With prices at contract lows, make sure you are pulling money out of puts when possible. We were able to take profits on puts today on some of our Chicago and KC put positions today. Soybeans: May soybeans settled up 1 cent at $9.66. New crop SX settled up ¼ cent at $9.52 ¾. Early on it looked like beans were going to the woodshed as 10:00 AM rolled around and we were 13 cents off the morning highs. Some short covering came in and we rallied back through the afternoon in choppy fashion. There was no real news, and this looked more like high frequency traders cannibalizing each other and leaving hedgers to scratch their heads. The funds remain net short 47K contracts. China is expecting over 23 mmt of beans to arrive from South America over the next 12 weeks. That’s close to 900 million bushels of beans coming down the pipeline. Some in the trade think this is setting the plate for China possibly being a net EXPORTER of meal by mid-summer. Argentina is 30% done with harvest and yields are reportedly huge. Despite the huge NOPA crush report yesterday, the beans had trouble holding on to gains. When a market gets bullish news with no follow through that can be cause for concern. Technically, SK has support at $9.44 (last Friday’s 6-month low) and then $9.28 ¾ (the contract low posted 10/1/14). Resistance above comes like a wall at $9.90. Hedgers: No change in recommendations. With the grains mired in these narrow trading ranges, Monday’s and Friday’s trade action are really the most important days of the week. Tomorrow we’ll see if CZ15 can once again hold support at the $4.00 level. The big support level for SX15 will be the $9.35 level. Finally, the American wheat producer will watch to see if the contract lows in KC and MW hold or if the funds will continue to add to their massive short bet in the wheat, further depressing prices. For now the funds are hanging- fire, waiting to re-light the fuse on their corn bet. The fund money flow could be the catalyst to break us out of the 25 cent trading range that New Crop CZ15 corn has been stuck in since 2015 began. A break out to the upside, above $4.20 would be a blessing to a lot of producers with unpriced 2015 bushels. As risk managers, we have to tap you on the shoulder and ask you what you have done to protect the possibility that the next leg is sharply lower prices. Don’t allow the past 4 months of sideways action in corn and soybeans lull you to sleep. CER
