Last winter, all traders could talk about was the need to plant additional acres of corn in 2011 to fulfill growing demand. This has developed as the USDA increased their planting intentions estimate 5.0 percent to 92.178 million acres. However, stocks will remain tight as quarterly stocks are down 15 percent from a year ago to 6.522 BB. This puts greater pressure on getting the crop planted on time. Right now, conditions are wet in much of the Midwest, which gives the bulls some ammunition. In other developments, export inspections were better than expected at 42.3 MB, but slightly below the average needed to reach USDA’s projection of 1.950 BB. The long position of the trend following funds has fallen 140 MB to 1.120 BB, while the longs of the index funds rose 20 MB to 1.905 BB.
July corn fell to 667 on Thursday, which ended the pullback from 722. From here, we soared the 30-cent limit to 701 on the coattails of the report. Unless there is a sell-off below 667, the potential exists for prices climbing to the targets mentioned in previous comments at 795 or possibly 825. Be alert for a top that could occur as soon as April 8th, although it may closer April 15th, and probably no later than April 21st or April 25th. The timing for a top depends upon how quickly the wave pattern from the low at 615.25 unfolds. Be advised that the market is in the mature stage of its advance from the contract low at 374.5 in which a major top, possibly a multi-year high, is expected to develop. Historically, April is a poor month for corn futures as they are lower 84 percent of the time. Next week, the odds are 60 percent that July futures will be higher.
Traders were expecting fewer soybean acres to be planted this season, and were not disappointed when the USDA projected them down one percent to 76.6 million. Meanwhile, stocks are tighter as quarterly stocks are down two percent from last year to 1.248 BB reflecting the increase in usage. This will keep the bulls enthralled. In other developments, rain in the southern growing area of Brazil will further delay harvest. Export inspections were in line with estimates at 29.2 MB with China taking 16.5 MB or 56 percent of the shipments. The long position of the trend following funds has risen 95 MB to 520 MB, while the longs of the index funds grew 20 MB to 800 MB.
July soybeans have risen past last week’s high at 1393.75 and are in the next leg of the rally from the low made earlier this month at 1278. Look for prices advancing to the targets mentioned in previous comments at 1510, 1550, or possibly as high as 1600. Cycle analysis shows that this could occur as soon as April 11th or April 18th, although it may be during the period of May 2nd-5th. This depends upon how quickly the wave pattern from 1278 unfolds. Be advised that the longer-term pattern shows the market is in the mature stage of its advance from the low made last June at 917.25 in which a major top is expected. Historically, April is usually not a good month for soybean futures as they are down 52 percent of the time. Next week, the odds are even as to whether July soybeans will be higher or lower.
USDA projects all winter wheat acres at 57.2 million, an increase of 6.2 percent from a year ago. In addition, quarterly stocks are forecast at 1.424 BB, up 4.7 percent from last. This puts wheat stocks at a more comfortable level, but prices will likely take their cue from corn and soybeans short-term. Western Kansas and areas of Oklahoma and Texas remain dry, but it is becoming old news. Export inspections were 29.5 MB and below the average needed to reach USDA’s projection of 1.275 BB. The short position of the trend following funds has risen65 MB to 85 MB., while the longs of the index funds grew 15 MB to 1.050 BB.
July wheat has risen past last week’s high at 787.25 on strength from corn and soybeans. Unless there is a decline below 740, we are likely headed to 820 or 835 before the recovery from the low made earlier this month at 691 is over. This could occur on April 7th. Once the rebound is complete, prices will be at risk for a decline to 640. Longer term, a bottom may not develop until May 3rd or May 12th. Historically, April is not a good month for wheat futures as they are down 52 percent of the time. Next week, the odds are 70 percent that July wheat will be lower.
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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.