EVERY HAT TRADED............... The week's volatility came on the back of commodities greatest pricing structures. Weather, rumors and demand. Beans rallied on frost and freeze threats in Argentina threatening unharvested beans sitting in the fields. Note, even with only 5 or 10% remaining to be harvested with drought cutting production sharply already in South America the world can't afford any further shortfalls. Rumors hit beans too that China was in this week secretly for 1 million metric tons of beans. Demand assisted corn as China this week was in buying 2.5 million metric tons for old and new crop year delivery. Current new crop year exports will cut our 2013 ending stocks by 300 m.b. and more to come. China's old crop corn buying is picking up, but it's new crop year delivery that looks to really take off. The Bears in the market after the March 30 planted acreage report suggested the 3.6 million acres more corn to be planted this year, will take corn 4.00 on the December contract as next year ending stocks soar on increase production. The problem here is they don't subtract future demand from the production. Grain prices are not supply side driven but demand driven. China and other Asian nation 2013 needs look to exceed the production increase from the 3.7 million acres increase, putting ending stocks again at a level not to exceed 1 b.b. come next fall. Of coarse early projections will be higher then whittled down each month as demand increases enter. Thursday's weekly export sales report showed new and old crop exports of 825,000 metric tons for corn and 1.4 million metric tons for beans. Next week's report will have this week's exports on it and we should see a reverse of this report with corn over 2.5 million metric tons and beans about 700,000 metric tons. Demand remains supportive for both markets. WXRISK.COM the AG weather site has rains across 60 to 70% of the Midwest grain belt with .50 to 2 inches of rain from Saturday through next Friday. This will slow planting but since most areas are overly dry it will be greeted by growers. The rain will assist corn emergence and all beans to be seeded now in a wet topsoil. Weather is not a pricing issue here and won't be until the crop is 35% or more planted, then weather becomes 90% of the pricing influence and demand 10% for new crop contracts. May begins Tuesday. Traders and funds won't want to be short going into the April 10 USDA monthly crop report and surely will want to be long. Since exports were up in April over March and April has seen Brazil and Argentina cut crop production there measurably, it's logical to assume the USDA will raise our export projections and lower ending stocks. Time to look to take profits on the spread. As you know, on my 2012 yearly grain outlook, released January 1. I gave a spread recommendation. I explained why traders would aggressively by November new crop beans and sell the December new crop corn as a spread into this spring planting. Since the January high of 6.00 on December corn it has dropped $.80. Since January, the November beans have rallied 2.25. That's up 3.00 plus dollars on this spread or $15,000. Time to consider taking profits. Reasons, one, you have the profits, it's a profit-taking business. Two, were in transition on the spread. New crop contracts are poised to trade-off weather now and not the success of more corn acres to be planted and less bean acres to be planted. In fact, many believe the surge in bean prices over corn, will lead to the June 30 planted acreage report showing less corn and more beans acres planted versus the March 30 planted intention report. We're not saying reverse the spread, were saying since we were first-in, it pays to be first out with risk now entering the spread. Watch out for the last day of the month Monday profit-taking by funds. It's a chance for them to book more profits off this weeks surge in prices and pay those bonuses. Technicals read like this. July corn support lies at 6.08, resistance 6.36 then 6.46. July bean support is 14.75 then 14.55. Resistance to high to mention. Wheat support is 6.34, resistance unchanged then 6.66.
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