If you would like to receive our technical comments including price projections and cycle analysis for important tops and bottoms, click on the link at the bottom of the commentary to sign up for a 30-day free trial subscription. Follow Ag Watch Market Advisors on Facebook and Twitter for timely information not posted in
Corn Outlook:
The fundamentals for corn are not bullish even though the USDA lowered U.S. ending stocks by 100 MB in this month’s report, and global stocks by 1.9 million tons. This largely reflects that even with a reduction, stocks are more than abundant to meet existing demand. Looking at exports, the USDA increased their forecast 100 MB to 3.3 BB because of increased imports by Mexico and Southeast Asia. Last week, inspections were 51.4 MB but must average 67.7 MB on a weekly basis to meet USDA’s revised projection. That said, reaching their target may be optimistic as there has only been one week during the marketing year that inspections have exceeded this level. Also, bear in mind that exports peak 58 percent of the time during the March-April period, and 82 percent of the time by May.
Bean Outlook
Traders remain optimistic from President Trump’s comment last week of China buying an additional 8 million tons of soybeans from the U.S., plus a report from the South China Morning Post that the current truce between the U.S. and China could be extended another year when Trump and Xi meet in April. However, no details were given. Meanwhile, Brazil is currently a cheaper source of soybeans, plus they are in the middle of harvesting a record crop. That said, if China makes additional purchases, it may only be a token quantity because of the price differential unless a political motive is involved. Looking at exports, inspections last week were 41.7 MB with China taking 27.4 MB. The bottom line is there needs to be increased announcements to China in the daily sales reporting system to support sustained price gains. Otherwise, the bulls could be headed for a big letdown.
Wheat Outlook:
Wheat found support this week from reports of ice damage to Russia’s crop. However, longer-term bullish news is lacking. Meanwhile, the USDA raised U.S. ending stocks this week a modest 5 MB but lowered global stocks 800,000 tons. Export inspections were higher than the previous week at 21.3 MB, and above the average of 16.4 MB that must be shipped weekly to meet USDA’s target of 900 MB. Currently, shipments are on track for 880 MB. Currently, the factor supporting wheat is fund short covering.
Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned