Wednesday, March 07, 2012 at 8:28 AM
.............. Monday saw classic two-sided trade prior the release of Friday's big USDA monthly crop report. Corn, beans, and wheat saw measurable buying prior the beginning of the new month with all three making new highs for March Monday before profit-taking set in with more profit-taking on Tuesday's opening. As we narrow into the final days prior the reports release, we see everyone offsetting or balancing the risk prior the report with more two-sided trade. Longs fat with profits sell the rallies, shorts buy the breaks and the spreaders un wind. Friday saw traders unwind their long corn, short wheat spreads and Monday their long bean short wheat spreads. Each day prior the report release at 7:30 AM central time Friday, we should expect similar uneven trade. Bloomberg news agencies poll of 28 analysts, myself one of them, came out Monday as to what the report may say. The key to the report is ending stocks. That's the amount of grain expected left over at the end of our grain marketing year. Our savings account. Marketing year for wheat ends may, 31 with corn and beans August 31. The new marketing years began the next day to coincide with their new harvest. Corn ending stocks average gas is 776 million bushels versus 801 last month, and 1.128 billion bushels in 2011. The range of guesses is 680-825. To open higher and close higher, we need to come in under the low average. Anything above that. but under the month prior, we opened higher but selling enters. Anything over the high-end and we open and close sharply lower as they will take previous profits gained in February and March. Beans came in at 253 m.b. versus 275 last month. Ranges were 188-275. Apply the corn scenario for trading. Wheats average guess was 837 m.b. versus 845 last month and arrange a 803-878. All the average estimates are lower as a result of lower average estimates on corn and bean production out of Argentina and Brazil. The trade is always more bullish than the USDA who has consistently taken a conservative stance on production yield estimates here in the US since last summer and in South America recently. So we shouldn't expect an overly bullish surprise but a friendly report. Should we rally report date, we still look for profit-taking days following, then renewed buying and new highs prior to March 30 planting intention port. The question is how much of a break and how long will it take before traders re- focus and re-position long before the March 30 report. WXRISK.COM the weather sites sees generally dry conditions in the 7 to 10 day outlook for Brazil speeding up harvest with wet conditions in Argentina the next five days. There was some talk of the dock workers strike in Argentina slowing grain shipments, but these work stoppages or slowdowns don't last. In Argentina and Brazil dockworkers and truck drivers are among the highest paid jobs. Truck drivers hauling grain to port have been found shot to death in their trucks as bad types try to create a job opening. So don't trade the stoppages, their short-lived. Support for May corn is 6.52 then 6.44. Resistance 6.64 then 6.74. May bean support is 13.25 then 13.10, resistance 13.40 then 13.75. May wheat support is 6.55 then 6.35 with resistance. 6.90.
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