We started the week on the demand-side news with our weekly export inspection report at 10am Central Time each Monday, telling us how much of each grain was inspected by the U.S.D.A. for near-term shipment and is a gauge of near-term demand. Wheat inspections were 17.6 million bushels, down from 19 the week prior; but over a year ago of 10; and four-week average of 16 m.b. Nothing to suggest a surge in demand is here, so the market sees it as a neutral demand indicator. Demand picks up in mid-to-late April and May.
Corn inspections were 38.8 m.b., versus 42.3 the week prior; 34 a year ago; and four-week average of 30.5 m.b. Inspections are up 26 m.b. over the year prior to date. Anything between 30 and 39 m.b. is friendly to demand fundamentals and 40+ begins our bullish numbers. This number will support prices, but not rally them from a demand-view as the market concentrates on supply side acreage adjustments and production on our March 10 U.S.A.D.A. crop report and March 31 planted-acreage report.
Soybean inspections were 40.1 m.b., versus 41.4 last week; 28 a year ago; and four-week average of 38 m.b. Key-world buyer, China, was in for 23.8 m.b., versus the two prior weeks of 21.9 and 20.6. Outside countries were in for 17 m.b., versus 12, 18 and 15.7 weeks past. Good demand signal all around. China's playing a little catch up after their Lunar holiday closings.
Though U.S. sales slow in February through May as South American crops come on line and compete for world trade, beans overall here and on the world market should see another record consumption year as once-known third-world countries mandate more protein into their diets. We started Monday trade on Sunday night's electronic trade with new seven-week highs on corn and wheat, but then profit-taking set in pulling them to a lower close on the day while beans held strength as traders started putting on the seasonal long soyoil, short soymeal spreads. Tuesday, today, saw more strength in beans on the oil meal spreads, but wheat and corn struggled with two-sided trades into midsession. It's hard to get enough news to sustain rallies such as we just had, but the downside looks limited as traders get ready for next Wednesday's monthly U.S.D.A. crop report, that gives another 2009 final crop production number for corn and beans with adjustments on ending-stocks inventory for wheat, corn and beans.
The media is taking a poll through Wednesday of the major brokerage houses and analysts as to what the report will say. By Thursday, we should have a breakdown that we will look at to get the average guess numbers for production and supply. The market then will have an idea how the industry is positioned and should trade this psychology aggressively. The common thinking should be not to be short into the report ,and positioning usually begins 2 to 3 days prior its release. March is the month where grains actually start to think on their own and less influenced by outside markets.
Traders already talking about spring planting weather as potentially bullish as the Midwest snow pack and early spring rains are setting up for another wet soggy field situation like the last two years. Ignore it! Corn goes to seed first and not until late April and May. The snow pack in the Midwest will long since have melted and run through the river system into the gulf. If anything should be made of the weather's influence, is the fall and winter pattern jet stream is carrying the primary storm system along the bottom third of the nation or western plains, southern delta, and east coast, leaving the upper Midwest where 85% of our grain is grown to be drier, setting up earlier planning dates than the two prior years. Other misleading thoughts out there is that the trade is surprised how little farmer selling of corn and beans have occurred since January 1. Why would any farmer sell his corn and bean crop at seasonal lows when the last three years have shown that holding it back until late June and July summer high prices brought far better returns. Prior to index funds trading massive dollars, farmers saw the summer weather premium rallies as risky and short-lived. Now, funds move prices appreciably higher and with consistency creating a farmer's dream hedge.
Those interested in attending my grain web-talk at 2pm Central Time, Wednesday, can call 800-542-1022 for a password. My Wednesday regular grain discussions are about 30 to 40 minutes and look closer at supply/demand fundamentals, as well as chart and trade positioning. With March futures in deliveries now, we will use the May futures price and charts for trades.
Major trend-line support for May corn lies at 3.66 all week, with 3.78 as minor support. Resistance is 3.96; then 4.04 - a gap area. A close over 4.04 sets up 4.38 as next resistance. Buy support or a close over 4.04.
May beans find support at 9.30. A close under and 8.90 to 9.00 is next. Minor support is 9.50 Resistance is 9.75. Buy anything close to 9.30 or on a close over 9.75.
May wheat finds support at 5.00; then 4.92. Resistance is 5.24. Buy the 5.00 support area to 4.92 or on a close over 5.24.
Buy breaks stay long, as March should unveil new highs but if traders buy corn and beans they may use wheat as a short hedge as wheat wont have a production number and ending stocks are at a record leaving this report to not have any surprises for wheat while corn and beans are a different story.