USDA REVEALS................. Let's knock off the Thursday export sales report first, then covered the crop report psychology. Thursday's weekly export sales report put wheat sales last week at 391,000 metric tons down 27% from the week prior and 40% under our four-week average. Egypt was missing from the party list for obvious reasons over their civil unrest. Egypt's the largest monthly buyer on the world market. Once this revolution is over buying will resume but the meantime leaves us filling small lot orders, and not enough demand on this report to drive prices. Bean export sales were 20,000 metric tons a new marketing year lows since last September 1. China was absent from the buy sheet old crop delivery but no surprise here as China was on there lunar new year holiday all week. But -CAUTION- now on near-term demand for soybeans. South American crops are coming to export now from March to April and we have to expect slower seasonal US exports near-term. Additionally, several weeks ago when the Chinese premier was here in Washington negotiating the new years grain deal, it was announced days after that meeting they took home a bonus of almost 3 m.m.t. but it was for 2011- 12 delivery, not this year. Last years same meeting resulted in a 2 m.m.t. take home purchased from the meeting, but for immediate delivery. The delayed shipping of this new year bonus buy tells us Obama stressed our tight supply inventory situation and asked for them to push more deliveries into the new crop season and marketing year. It doesn't mean less demand overall, but less for old crop delivery before September 1. Couple this with prospects for more acres going to corn and less than needed for beans for new crop delivery and the fact that November new crop soybean futures are $.65 under the old crop year July soybeans. Were set up to see new crop November gain on July crop and potentially November over July. A great spread trade to follow. Corn export sales were a whopping 1.107 m.m.t. up 51% over the four-week average and over 1 m.m.t. for the second consecutive week. It's becoming clear to importers that they better move in and buy US corn now as stocks continue to drop and prices rise. They're all afraid they may have to pay one or two dollars more later. How about the crop report on Wednesday. They left wheat alone putting ending stocks come wheats new marketing year June 1, at 818 m.b. unchanged from the months prior. Traders expected a drop of 8 m.b. off poor weather conditions and better demand into the Middle East but even if a little lower resulted it would've had little impact as wheat traders await March on our winter wheat crop for dormancy to break for production issues to trade. As long as were still sitting with ample wheat stocks it's all about production. Beans too saw no change in ending stocks from the months prior at 140 m.b. This still represents the lowest ending stocks since 2008 of 138 m.b.. Total soybean exports for the 2010-11 marketing year which ends September 1 are at 89% of the USDA forecast, yet we have six months left in the marketing year. Clearly ending stocks will decline further, but it also gives us more mindset the government wants to push more exports out into the new marketing year after September 1 , supporting the long November short july soybean spread in the long-term. Corn ending stocks were all the excitement. Corn stocks come September 1, 2011 were pegged at 675 m.b. down 70 m.b. from last month and down eight of the last nine months. The 675 represents a 20 day supply and has us set up to run out in 2012 if we have a poor summer growing season and demand stays unchanged. The last five monthly reports have seen an average ending stocks drop of 89 m.b. Prior to February the four prior months averaged a $.71 gain from the crop report results. This sets up may corn futures to push to 7.50 to 7.60 to price in this reports 70 m.b. decline. Funds are systematic and pattern in their trading so unless something enters that's not there now, we have to expect further gains, even if a near-term profit-taking pullback occurs. Early seed and fertilizer sales occurring are favoring more corn acres than beans will be planted. Only the big landowner growers take advantage of early deep discounted purchases as the early discount buy savings add up on large acreage numbers. Smaller growers let the price of the grain determine how much of what crop they will plant and they may not commit until after the government's March 31 planting intentions report. But don't expect a big surge in corn acres. Farmers already plant fence post to fence post, thanks to two of the last three years being the most profitable years ever for farm income. There is talk of getting acres from the government conservation reserve program. This is unlikely in 2011. Reasons are many. First, the land originally put in is the worst land a grower has. Low lands that flood and land void of adequate topsoil to produce yields profitable enough to offset fertilizer costs. Additionally, if a farmer pulls land out early, he has to pay back what government money he received to put it in. February told you the government's thoughts when they announced they would accept up to 3.9 million acres additional into the reserve program. Corn and beans can not steal acres from each other as both need to expand. The land looks to come from alfalfa, hay and oats fields that are far less profitable to the growers. But even then were talking about 3 or 4 m.a. available to swipe away. Acres just are not there to ensure a surge to safer ending stocks levels for 2012. This sets up the planting and growing season between April and August to be the most weather sensitive to pricing in history. Here's your technicals. March corn support is 6.84. A close over 7.00 is very bullish setting up 750 the 760 as next stop. March beans support is 14.15 then 13.95. Resistance is 14.70. A close over resistance would be very bullish technically setting up 15.00 next. March wheat support is 845 then 825 with resistance the old high of 895.
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