Thursday's Weekly Export Sales Report showed 936 t.m.t. of corn was sold last week up 59% from the week prior; however 4% under our four week average. Our key Asian buyers were in for 660 t.m.t. vs. 116 the week prior. These numbers show that Asian countries are coming back in buying after last week's report reflected a slow week when Asian importers took a step back to see what the Swine Flu outbreak might bring. I would expect sales over 1 m.m.t. next week- it is a good demand signal. Our goal this week was to see July move into the 4.18 to 4.28 area on the USDA Crop Report and that is what happened with a 4.20 trade open Monday and 4.32 high after the report. Today at mid-session were trading at 4.26. Mission accomplished- now what? We still have 52% of the corn crop to plant with 85% yet to plant in the Eastern Corn Belt States of Illinois , Indiana and Ohio . With the heavy rain from this past Wednesday through Saturday, the Eastern Belt will not plant until Wednesday. Several weather models suggest we will be dry Monday through Saturday. If true, planting progress on Wednesday to Saturday will soar, allowing traders to consider removing some of the weather premium. A dry forecast could pull July corn back to 4.05 areas. A great long term buying opportunity. This would also allow funds to pay bonuses on the month end profits taken before rebuying on bullish long term fundamentals. Now what if the weather changes, what if the jet stream bends? One weather model is already saying next Wednesday and Thursday could see rain enter the Midwest . If we come in Monday and rain of measurable amounts are forecasted it drastically tightens the planting window time as growers want all seed in by month's end. A wet forecast would push July Futures to the 4.38 to not higher than 4.50 prices before the month's end profit taking enters.
Thursday's Weekly Export Sales Report showed 401 t.m.t. of beans were sold last week down 39% from the week prior and 45% under our four week average. Key player China was in for 132 t.m.t. vs. the two prior weeks of 197 and 468. The two weeks of slowing demand can be attributed to China backing off on the Swine Flu scare then last week's Swine Flu case discovered in the their country. They are clearly trying to figure out if imports by ships can be responsible. This will resolve itself soon but near term is affecting the U.S. sales but long term through the year and next China will continue to satisfy their mandate for more protein in their diet by being a major drain to the world's high protein vegetable oil crops. The USDA announced today a sale of 120 t.m.t. to China that with others that will show up on next week's Export Sales Report. Like corn- beans too saw the report spike rally I had called for into and on the USDA Crop Report leaving funds fat with profits and due to go to the bank with profit taking sometime before month's end. Beans do not have a weather premium built in like corn and wheat as beans can be planted into early June without a problem. The rally is all about demand outstripping supply but profit taking is ever present on the bull trend of the charts so be ready. The key to the technical side of the bull chart tend is this 11.50 price on the July Futures Chart. A close over 11.50 is a major buy signal to large trading funds that are 90% chart inspired. There is virtually nothing stopping beans until 12.20 next . If 11.50 holds as a near term top and let soy drier weather next week prompts a quicker planting pace; we could see a mid-month correction- 11.25 is first support, and then 10.80 with worse case scenario and dream buy 10.55.
Thursday's Weekly Export Sales should be call the weekly sales of they were very weak at 102 t.m.t. down 60% from the week prior and 45% under a weak four week average. Importers see a very poor crop condition rating on the U.S. Wheat. They will wait until June now and if weather brings on a sharp improvement in quality to 65% in good to excellent condition, they will move in and buy but if weather and rating stay under 50% in G-E condition, well they can buy poor quality wheat cheaper elsewhere in the world. A demand rally is a wait and sees deal now. Wheat in the last three weeks moved from a 5.15 low to 5.90 largely on trend following funds getting out of short positions. They went from short 44 thousand contracts three weeks ago to 30 thousand this week or bought 14 thousand contracts- Either way they were selling and this gave us the rally. Two issues brought this on: One, they were not making money as the 5.10 area low had held since March 3 rd . Two, crop conditions were getting worse and the talk of lower production numbers on last Tuesdays' Crop Report were expected. The question now is will they re-enter long. Ending stocks inventory remains bearish with 669 m.b. left over this year and 637 projected next year. This leaves only current growing season issues on winter and spring wheat crops to get buyers in. With the Spring Wheat planting far behind the five year average due to excessive rains, and if rains continue into month's end we have a good chance of less than projected acres to be seeded. The Winter Crop keeps showing the damage from the April Freeze as the heads keep developing showing the damage. As the 70% of the heads in number one wheat producing state of Kansas emerge and damage surfaces similar to the damage in Texas and Oklahoma, coupled with Spring Wheat planting problems we could expect more buying in wheat even if it comes from short covering. Remember funds are still short 30 thousand contracts. If these issues come to play, July Wheat could have another leg up to near 6.20 to 6.30. Support lies at 5.76. Buy a break to support but do not risk much as a close under support sets up a test of 5.50.