THE WEEKLY Grain Report
CORN:
Hi, this is Tim Hannagan and it is Friday, March 4th and this is my weekly review. Demand fundamentals had very little effect on pricing this week. Our Monday weekly inspection report showed 31.6 m.b. were inspected for near term export up from 24 the week prior but under a year ago of 44 m.b. Thursday's weekly export sales report showed 811 t.t. of corn was sold last week, down 11% from the week prior. Asian sales were decent at 482 t.t. We need 1.2 m.t. or more sold weekly to be price bullish. View this week's demand signals as neutral to mildly bearish. As I noted on my Wednesday report, corn's upswing was solely influenced by the bean rally. The majority of the trade looks to resell corn when beans are finished due to the thinking that our carry over or ending stocks figure will climb and next year's carry over, "weather permitting", will be greater as well on an increase in acres going to seed this year. Some suggest the March 31st planting intension report will show a acreage increase this year of 1 to 3 m.a. Even with a sharp bean rally Monday if they see dry Brazilian weekly weather, I would look to sell strength in the May contract. With stops over 2.26.
WHEAT:
Demand signals for the week were all bearish as price hikes chased importers to the sidelines. Monday's weekly export inspection report showed 22.3 m.b. were inspected for near term export, about unchanged from the week prior. Thursday's weekly export sales report put sales last week at 453 t.t. down 17% from the week prior and 20% under a weak four week average. With world stocks high U.S. wheat prices need to push lower to find demand. Wheat has enjoyed a nice short covering rally into the last half of February thanks to our bean rally pulling all feed grains with it but March looks to end differently. The March 31st acreage report looks to show a increase in spring wheat plantings this spring as traders shift bean acres over to avoid the costly chemical application to ward off Asian rust disease expected to hit midwest farm lands this season. Additionally, our winter crop breaks dormancy in our western plains in March. The winter brought ample moisture to our subsoil and the crop went dormant in November at 76% in good to excellent condition versus the two preceding years of 50% and 61%. Of course if April and May bring drought prices will be off to the races ahead of the start of our June harvest. Sell strength or buy the April 3.25 wheat put for 3 or 4 cents and hold until it expires on March 24th. A higher trade Monday on a bean rally looks to be very limited.
BEAN:
The demand side reports on the week truly reflected the fear over production in South America as drought continues. Importers have rushed in to book U.S. bean shipments on fear Brazil may fall short on goals. Monday's weekly export inspection report showed 27.3 m.b. were inspected for near term export, up from 18 a year ago and equal our four week average. Thursday's weekly export sales report showed 651 t.t. were sold last week up from 426 the week prior and 37% over our four week average. China was in for 293 t.t. versus 130 the week prior. Now, do not get exited about demand as these are false signals. Normally this time of year we are facing the start of another record bean harvest out of Brazil and Asian markets that traditionally overbook U.S. bean sales in January and February start to cancel previous purchases and switch to Brazil where beans traditionally sell at a discount to U.S. prices. Brazilian beans are always cheaper at harvest than U.S. beans because Brazil stores no excess grain, it goes from the field to the port. To insure grain does not sit in the field to rot they always post their cash price at a minimum of $6. per ton under any U.S. posted price. This year we have yet to see cancellations as drought continues to cut their yields up until March 15th. It is all but certain that cancellations are coming and the current demand surge is a false demand signal. This rally is all fear trading as the supply curve on the chart heads down the price curve goes up. This will end at the end of the growing cycle March 15th. May beans pushed to a five month high of 6.35 this week as dry conditions were to prevail through Sunday. Thursday saw our first down Thursday in a month after overnight satellite data suggested Brazil could see its appreciable rain event in over a month next Thursday to Saturday. Though it is too far off to know certain rain totals, funds fat with profits and an end to the growing season in sight, traded fear before fact. Friday saw two sided trade as weather forecasters split on rain or no rain. Wxrisk.com sees dry weather. If right May beans will gap higher Monday making new highs. If your long take profits and sell short on a lower close. It looks like funds are about to give up their long position they built, now that the end of brazil's growing season is in sight. Consider this on a Monday rally, take your long profits and buy a April 6.30 put. It settled at 21 cents but could be 12 or 13 cents on a rally.
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