GrainTV – February 28th, 2012

GrainTV watched the markets open this morning with beans backing off their highs from the overnight. At the time of this post we see March beans at 1300 1/2, and it will be important to watch the close. This morning Brock and Logan look at soybean technicals, Brazil production projections, and drought conditions across the northern plains with a snow storm on the horizon. Tune in for the full report!


THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS.
PLEASE READ OUR RISK DISCLOSURE.

 

Soybeans Hit Fresh 5-Month High

Today, we saw May soybeans hit a fresh 5-month high after breaking through resistance in the 1290 area.  The chart below taken from our Firetip trading platform shows this new high as we finished the day above 1300.  Soybeans have had quite a run-up lately which calls to our attention the Relative Strength Index (RSI).  This indicator is found on the bottom of this chart and is one of the many indicators producers can follow using the Firetip software.  When RSI reaches the 70 level the market is said to be overbought.  As of this writing, May Soybeans are currently at a 64.1 on the RSI chart.  A correction could be in the near future as this contract becomes over bought.  The 1300 area will likely prove to be a battleground and a psychological barrier for traders to overcome.  If you would like to follow this contract in your home or office, give one of our brokers a call at 877-472-4607 or sign up for a demo below.

Soybeans broken resistance

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THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

Keep An Eye On New Crop Basis

This week spot corn basis remained unchanged throughout the country despite basis dropping seven cents at the Gulf. Support was given to the market by ethanol plants that increased their basis a penny on the week. Even though the export market did little for corn, basis for spot soybeans increased four cents triggering a one cent gain on average throughout the country.

Turning attention to new crop, we are also seeing strong basis levels that are at least eight cents higher than the five year average. Not only do current basis levels sit well above the five year average but they are making steady gains beyond the maximum basis seen for this time period in the last five years. Although new crop basis is rising to seasonally uncharacteristic levels, historical analysis would suggest that basis has the capacity to continue improving at least for the foreseeable future.

However, we have observed anomalies to this tendency. The most notable example was 2010 when basis declined sharply from July until harvest. During that year the production expectations were high, producers planted early and we had ideal growing conditions up until the grain filling period. These expectations impacted basis negatively from July until harvest.

The basis events in 2010 provide a warning to producers for the 2011-12 marketing year as to the potential effects that bumper crop expectations have on new crop basis. Though we expect new crop basis to maintain its strength going into planting and pollination, we would warn producers that July will mark an important pivot point to this trend. If 94 million acres are planted to corn this year and weather is cooperative, new crop basis could face strong headwinds in the second half of the growing season.

Soybeans Picking Up Ground

The export sales report this morning confirmed recent strength in the soybean market, with 1,159,400 MT of soybeans reported for Feb 10-16. The Chinese were a large purchaser of old crop soybeans, purchasing 521,100 MT during a visit by Vice President Xi Jinping to Iowa.

At the time of this post we see DEC 12 corn down 7 while NOV 12 beans are up 1 cent. In recent weeks the ratio between these contracts has exploded, with new crop soybeans now trading at 2.3 times that of new crop corn. The trade is looking at 2.4 as an area where soybeans will be very competitive for many farmers to plant, especially those facing corn-on-corn decisions.spreadchart                                                                                        

THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS.
PLEASE READ OUR RISK DISCLOSURE.

Another Week, Again Markets Hit Recent Highs

The equity and commodity markets continue to creep higher as they have the last couple of weeks.  The Dow is up another 31 points to finish trade Thursday at 12,984.69.  Oil has followed the Dow higher and is up $4.09 a barrel to settle at $108.15 today.  Gold is up $65.90 an ounce to end trade at $1,781.40, while the dollar index has fallen sharply.  All of these markets are beginning to look a little overbought.  On the other hand, the agricultural commodities have fallen slightly this week.

Corn is off 2 ¼ cents as of the close Thursday to finish at $6.39 ½ on the March contract.  The grain has been in a relatively tight range of late as traders and producers are eagerly awaiting the USDA’s Outlook Forums projections set to be released Friday morning.  Ethanol demand is starting to raise concerns as a few plants have shut down and stocks are very high.  Export sales have been above expectations recently and traders are eagerly awaiting the latest numbers to be reported tomorrow, a day late due to Monday’s holiday.

Soybeans again hit multi-month highs Thursday to settle at $12.76 ¾ on the March contract which is up 9 ¼ cents this week.  Headlines have been made by China’s recent purchases and commitments to buy large quantities of soybeans both for this year and next.  Production concerns in South America are adding to the rally.  On the charts, soybeans should run into resistance in the $12.85 area which is approaching quickly.  Trader’s focus is also on the USDA’s numbers to be published Friday.

Wheat continues to slide and is down another 2 ¼ cents ending trade today at $6.41 ¾ on the March CBOT contract.  Minneapolis Exchange traded wheat was the leader to the downside Thursday as spring wheat acreage is seen as increasing greatly.  Export sales have been encouraging and should get even better as Russia and Ukraine are approaching export thresholds.  Tomorrow’s export report could provide some fundamental support.

The equity markets are at the highest level in several years.  The commodity markets have not followed sliding slightly except soybeans.  Tomorrow will provide some fundamental news by way of the USDA’s Outlook Forum and export sales report.  After tomorrow’s reports, the next fundamental information comes on March 9th when the USDA Supply/Demand and Crop Production reports.

THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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Old Crop/New Crop Corn Spread Meeting Resistance

There has been a lot of talk surrounding the old crop/new crop spread in corn. Currently, the spread between July and December futures is sitting at 79 3/4 to the July side.  Below is a chart of this spread taken from our Firetip trading software. As you can see, we are sitting right below the 80 cent mark after being as high as 127 cents in late August.  The spread is meeting resistance around the 80 cent mark as this level has been tested several times in the last few months.  We could see this spread widen into planting season and through the summer.  If you would like to track the old crop/new crop relationship in your own home or office, simply take a demo by clicking the button below or give us a call at 877-472-4607.

July Dec corn spread

THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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Macros Positive, Grain Mixed

The equity markets have taken center stage this week as several key indexes have reached multiyear highs.  The Dow is up 102.85 as of the close Thursday settling at 12,904.08.  Oil has risen due to Middle East instability and is up $3.29 a barrel to close today at $102.28.  Gold has found some buyers climbing $7.40 an ounce to end trade today at $1,730.  The dollar index has benefited from Greece debt uncertainties, which has pressured commodities.  The grains are mixed so far this week.

Corn has fought a two-sided battle this week but is ultimately up 4 ½ cents to finish trade at $6.36 ¼ on the March contract.  Demand concerns stemming from large ethanol stocks and feed competition from wheat sent the market to multi-week lows before turning around Thursday.  Today, better than expected export sales sent the market higher and were reported as 1,005,900 MT, which is up 44.9% from last week.  South American weather remains a concern.

Soybeans have been the leader to the upside as Chinese demand prospects were heightened after visits from some top tier officials.  The oilseed is up 29 ¼ cents to settle at $12.58 ¼ on the March contract.  Soybeans are trying to buy acres this spring and the ratio between new crop soybeans and new crop corn is the highest it’s been since July.  South American production remains a concern for the market.  Export sales were disappointing at 436,700 MT, which is down 27.6% from last week.

Wheat has been the weakest of the grains losing 2 cents on the March CBOT contract to finish trade today at $6.28.  There continues to be a large supply of wheat on the world market and more recently Australia revised their production estimates higher.  Despite a stronger dollar index,U.S.wheat is the most competitive in the marketplace evidenced by two sales to Egypt.  Export sales were reported as 420,400 MT, which is down 40.6% from last week.

The Dow and other indices have reached multiyear highs which have gathered many traders’ attentions.  Grains have been mixed this week with corn and soybeans rallying, while wheat has fallen slightly.  Demand and weather concerns have been a mainstay over the last several weeks.  Looking ahead, traders and producers will focus on planting intentions and the South American harvest.

THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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GrainTV – February 14th, 2012

This morning fundamentals are supporting soybean futures, at the time of this post we see March Soybeans up 3 3/4 to 12 55 3/4 as the rest of the grains trade lower. Brock and Logan discuss South American weather, technicals, and export sales data on this morning’s GrainTV

Grains Sell Off After USDA Reports

The grain markets fell after the most recent USDA reports were published today.  The Dow, however, is up 28.23 points to close Thursday at 12,890.46 after Greece’s debt issues were resolved for the time being.  Oil followed on increased demand prospects adding $1.99 a barrel to close at $99.72 today.  Gold has met resistance in the $1,750 area ultimately ending trade at $1,731.90 Thursday, up $3.60 an ounce this week.  The dollar index has fallen modestly as the Euro has rallied.  The grains have been hurt the most.

Corn had choppy, sideways trade for most of the week in anticipation of the USDA reports to be released today.  After the release, corn moved to its highest point in several weeks only to sell off into the close.  Overall, the grain is down 7 ½ cents for the week settling at $6.37 on the March contract today.  Export projections were increased 50 million bushels, while ending stocks were lowered by 45 million bushels.  Weekly export sales were reported as 694,100 MT, which is down 23.9% from last week.

Soybeans like corn were fairly quiet this week, but Thursday changed that pattern.  The oilseed traded in a wide 25 cent range after the report was released.  Little was changed in the reports leaving the market searching for a direction.  Chinese demand prospects are providing underlying fundamental support, though exports are far behind the pace needed to meet the USDA projections.  Export sales this week were reported as 603,200 MT, which is up 95.6% from last week.

Wheat received the biggest surprise in the reports Thursday as ending stocks were reduced by an unanticipated 25 million bushels.  However, global ending stocks were revised higher to an all-time record.  This revision sent the grain down sharply and for the week is off 14 ¾ cents to $6.46 on the March CBOT contract.  Export projections were raised 25 million bushels due to better than anticipated sales to date.  For the week, export sales were report as 707,900 MT, which is up 36.4% from last week.

The most recent fundamental news was released this morning and the grain markets rose only to fall sharply later.  A mid-session reversal came sending the markets ultimately lower on the day and for the week.  The outside markets have been mostly positive this week as debt concerns in Greece has subsided for the time being.  Producers and traders will now begin to focus on this summer’s crop and the Planting Intentions report to be released on March 30th.

THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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