Thursday’s weekly export sales report showed 879 t.m.t. of corn was sold last week off 17% from the week prior. Asian sales were 354 t.m.t. vs. 688 the week prior. Sales had been over 1 m.m.t. for three consecutive weeks so a pull back is reasonable. The 879 is still a very good demand number. Demand now is 10% of our pricing influence while weather and its impact on planting and eventual growing is 90% of our pricing force. This week was all spreading as traders bought beans and sold corn as they were covered with ample long corn positions but under covered on beans. Corn’s rally from its March 31st Planting Acreage Report low of 3.80 to this month’s high of 4.06 priced in those early bad weather planting delay concerns but with acreage intensions unchanged from a year ago and not 3 or 4 m.a. less as many thought ahead of the March 31st report. There is not as much production and ending stocks concern now. That will come back when we build our summer growing season weather premium in. WXRISK.COM the weather site sees Midwest rains Sunday and Monday with on weather model adding more rain next Thursday and Friday and wetter the 27th to the 30th. However, one model of weather prediction sees a seven day drier stretch after Monday. If that occurs the planting window opens and corn could pull back to 6.66 to 6.70 area basis may at which point – I will buy the July and or December contracts long. We are near term shaky but long term bullish.
Thursday’s Weekly Export Sales Report showed 808 t.m.t. of beans were sold last week up 87% from the prior week and doubles our four week average. Kay world player China was in for 405 t.m.t. vs. 238 the prior week. Take note that China has been half of the total weekly business the last two weeks meaning other countries too are seeking high protein crops. It signals a strengthening demand patter. Beans this week continued to push higher as trend following funds and Index Funds increased their long position. Our ending stocks continue to drop as demand world wide for protein crops continue to increase. Our January USDA Monthly Crop Report put our 2009 ending stocks at 225 m.b. with poor growing conditions in South America and China and other countries buying for increased needs and inventory building purposes the February report dropped ending stocks to 210 m.b. The March report to 185 and our April USDA Report 165 m.b. Funds realized after the March 31st planted acreage report showed no increase in acres to be planted this year that they had to increase risk coverage and the buying began. Trend following funds have gone from short one thousand contracts four weeks ago to long forty-seven thousand entering this week, with May Futures from 9.00 on March 30th to over 10.070 this week. Weather as pertained to field work and or planting delays is not an issue as beans are planted in May and up to June 10th. This is about demand outstripping supply. Eventually a weather premium rally over 12.00 will occur by mid summer. As it is always too hot here or not enough rain there- and fear of hot, dry stretch cutting yields could leave ending stocks under 100 m.b. or possibly running out. This current rally ends when funds feel current ownership coverage is sufficient and that could happen any day. We hit a key resistance level on the chart today basis May at 10.70 before profit taking set in. A close above 10.70 sets up next minor resistance at 11.10 and major resistance 12.50. Support now lies at 10.50 then 10.25.
Thursday’s weekly export sales report showed 121 t.m.t. of wheat was sold last week down 36% from the week prior and 49% under our four week average. Demand remains in a six month bearish trend. If demand is going to turn we need our currently poor winter wheat crop rating to improve sharply. If that can happen into mid May, then foreign importers in need of high protein quality milling wheat will turn to U.S. Ports to fill need for June to August shipments. Wheat could not be anymore boring. We are stuck in a seven week trading range between 5.00 and 5.60 basis May. To break out to the upside we need a crop condition report the next two Monday’s showing quality declines. The heads are developing quickly and could show problems from that early April freeze in the Western wheat belt. On the other hand, if damage fails to surface on the reports and with warmer and wetter conditions this week and next, conditions could improve bringing on selling with our 5.00 support being taken out. We will wait for the 3.00p Monday Condition Report for direction.