I SEE MARCH

By IBTimes Staff Reporter | February 26 2010 3:55 PM

Export sales report came in like a whisper as ports for shipping here were quiet as last week was the Chinese week-long New Year's holiday bringing their business on the world market to a very slow to almost zero pace. Wheat sales that have enjoyed good Asian business lately, saw only Japan in for 44 T.M.T. The total sales on the report were 375,000 metic tons down 8% from the year prior and 26% under our four-week average of 508 T.M.T. Last year this time, sales were 465 and in 2008, 308 T.M.T. Boring, to say the least. The bottom line is that record U.S. and world-ending stocks leave so much wheat in users hands and falling off shipping export ports that demand is so spread out, no one is a major exporter. Demand cannot drive the market until late April and May when our new harvest here comes in and fresh production draws to us seasonal demand. Wheat's hope for strength comes if the record short 65,000 contracts held by trend-following funds, finds that postion closer to 20,000 shorts the next two months as seasonal turn up from supply-side fundamentals as the winter crop breaks dormancy in March and yields and quality levels develop in April having funds buying back shorts on crop weather production uncertainties.

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Corn export sales were 401 T.M.T. down 59% from the week prior; 55% under our four-week average of 885 T.M.T.; and below the two prior years of 448 and 601 T.M.T. Makes sense as the Asian holiday slows world trade, but a closer look tells another story. Asian customers were in for 433 T.M.T.; up for the fourth consecutive week. Demand, near and long-term, is determined by Asian business as they account for over three-quarters of our exportable grains yearly, and with the rally in the yen offsetting the U.S. dollar rally since December, it makes for a favorable exchange rate to keep buying U.S. corn and other grains. Beans sales were 239 T.M.T., up 17% from the week prior. This came as China was in for 177 T.M.T. versus zero the week prior. China was an active buyer even as they had a week of government holiday closings. Bean total shipped were 1.122 M.M.T. with 666 T.M.T. going to China. Well, February is over and here comes March which is when grains seasonally turn up.

We saw corn rally $0.50 in March last year, beans 1.10 rally, and wheat $0.51, all basis the July futures from the first trading day in March to April 1. This March also leaves great fear in anyone who is short the market to want to buy out and get long on two fronts. 1) the March 11 U.S.D.A. monthly crop report will be feared to lower ending-stocks of corn for the second consecutive month and beans the third consecutive month, as well as another 2009 final production update. We know analysts have felt the late harvest bad weather could end up cutting corn production and the market trades fear before fact - the fear is the report can come in very bullish. So, expect short covering and speculative buying ahead of its release. 2) the March 31 planting acreage report. No one will want to be short going in on fear their market may show a 2, 3, or 5 million acres less number to be planted on the market their in.

The commitment of traders report that tracks fund positions entered this week with a cut in short positions for the first time in a month and I suspect they cut short positions further this week. This suggests that trend-following funds who are short corn, beans and wheat have begun the seasonal turn from being short in January and February,to neutral and then long for the seasonal uptrend in March through June.

Next week will confirm if our January proclamation that seasonal lows will be in during February and before February 20. To date, lows occurred the first week of February unless March unveils a bearish surprise.