It's the beginning of a new month, but the end of the week. Traders are more concerned with the pre-weekend risk thinking, though, and it's leading to a more subdued 2-sided trading on this Friday. When we enter Monday, the psychology will turn to new month thinking instead, and the focus will be on re-establishing a foothold on longer-term positioning.
Grain traders are looking ahead to the Friday, March 9 USDA Crop Report due out ahead of the open. Traders will expect the report to raise export projections and lower ending stocks. Here's why: demand was measurably better in February over January. Corn exports were 2.333 million metric tons in January and 3 .451 million in February. Bean exports in January were 2.171 million metric tons and 2.506 in February. Couple increasing demand with the general overall opinion that weather conditions in February were less favorable for corn and beans in Argentina and Brazil. There was a 7-day heat dome with temperatures over 100° that offset any small rain events. But now that the growing season is ending in South America, weather concerns about that crop is limited to the effect on harvest progress.
Our ag weather site WXRISK.com sees a generally warmer and drier 10 days ahead for Brazil's speeding-up harvest. That in itself is bearish as it allows Brazil to become the world's primary port for affordable beans. Offsetting that psychology is the yearly harvest problems that lead to their two small ports that can't handle the business. Ships already are backed up and can't get into port, while trucks filled with early harvested grain stretch miles. This is the norm. It always seems that dock workers demands for more pay surface this time of year, leading to work slowdowns, followed by China turning to the U.S. ports to fill needs.
Next week's psychology is largely about the USDA report Friday and traders wanting to get possession by going long. But don't expect any large surge in prices as traders know that recent government reports have come out very conservative on adjustments. Traders will buy marginally into the March 9 report followed by profit taking after it. Then, they'll quickly turn to buying again prior to the March 30 planting intention report when farmer surveys show how much of each grain will be planted.
Monday technicals read like this:
May corn support is $6.46 then $6.42 with resistance at $6.64 then $6.74. May bean support is $13.10 with resistance at $13.40 then $13.75. May wheat support is $6.48 with resistance at $6.90 and $7.10.
There is a substantial risk of loss in trading futures and options. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report.