WEATHER RULES.........The rally in wheat this week came off the lows for the year under 6.00. Calls to me asked is this wheats low now for the year our just another bounce. Since January, we have steadily declined from 7.04 to 5.92. On the way we saw six short covering rallies. The smallest was $.30 and largest $.50. Trend following funds have consistently held between 98,000 short positions and 55,000. Taking profits largely on the month end book balancing. The bearishness came as we sat on 800+ million bushels of ending stocks, double what's considered tight stocks. Demand coming as Asian markets use us as a port for low-quality wheat for their feed ration, while other countries turn to foreign ports for high-quality wheat for human needs. Our disastrous crop last year left us as a third or fourth port of origin for wheat. It may be coming to an end. Our current crop coming to harvest next month is rated 60% in good to excellent condition, versus 33% last year. Demand for new crop delivery has been picking up. What could transpire is the US becoming the number one port of origin for quality milling wheat the remainder of this year. Spain, France, Australia, Germany and Russia all had rough winter crops due to either too dry or severe winter weather. We still have over 768 million bushels left from last year's poor quality crop that should assure we continue to meet the low-quality wheat demand for the feed ration, while our new crop wheat captures the demand for high quality milling wheat . We could double our exports beginning in June. There's no shortage of wheat in the US and traders may not want to build a good long position. But if trend following funds cut their near record short held positions by 75% we could push 82 to 1.50 higher. If funds are going to buy out of their short bias it will be triggered by chart parameters. Funds will accelerate short covering on a close bases July over 6.60 . Stay tuned.I had questions on my free regular Wednesday grain web talk about the USDA report showing Brazil's corn production at 67 million metric tons, up from 62 the month prior and will that corn compete against exports of US corn. Brazil's autos run off 80% ethanol. Ethanol is made largely from their world record sugar production that recently got hit by bad weather with shortfalls of over 30%. The government pushed for more corn production to balance ethanol production needs. In other words, the corn was grown for internal domestic use for ethanol production. To ensure the corn stays home, the government has placed a heavy tax to ensure producers don't move it to export. Near-term look for grains to build their seasonal weather premium in the market. It usually occurs between mid-May and early July. If weather rallies occurred late July and early August, then it's a real weather problem of too hot and dry. The May to early July premium is a fear pricing of what weather uncertainties lie ahead as we move through early emergence into mid-crop growth development. WXRISK.COM the ag weather site sees generally warmer and drier than normal Midwest weather through month then. It's the daily updates to how dry and how warm and where where we use to trade ,so leans on the daily updates for trade confirmation. The technicals read like this. Support for July corns entering Friday is 6.08 resistance 6.28 then 6.44. Support on July beans is 14.10 then 13.90. Resistance is 14.65 then 14.85. Support for July wheat is 6.40 resistance 6.60 then 6.80.
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