On The Money Grain Commentary 6-27-13

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Corn Outlook:

What turned out to be a slow start in getting the corn crop planted this spring may wind up being a decent growing season, although the upper Midwest could still have some issues.  Conditions have been improving the past couple of weeks with the ratings rising one point last week to 65 percent in the good-to-excellent category.  This compares to a rating of 56 percent a year ago.  Traders are marking time until the USDA releases their prospective planting report tomorrow.  Most expect corn acres falling to 95.3 million compared to 97.2 million in March and 97.1 million a year ago.  With a decent yield, ending stocks could reach 1.5-2.0 BB this fall.   Meanwhile, exports remain a sore spot and were a marketing year low at 5.8 MB.  The trend following funds have flip flopped for the fifth time in their position since April and are currently short 15 MB.

December corn has been on the downswing since peaking last week at 571.  Look for support at 532 followed by 526-523.  Resistance is expected to be encountered on a bounce to 553-557.  Unless the planting report is bullish and the market rallies beyond 573.5, the longer-term trend is down with the potential for a sell-off below last month’s low at 512 to 475-467 or 445.  Seasonally, there is a 63 percent probability of corn futures trending lower through July and bottoming during the first week of August.  If we follow the norm, a bottom could occur around August 6th or as late as September 4th.  Meanwhile, one pattern shows the chance of bottoming as soon as July 19th.  Next week, the odds are 60 percent that December futures will be higher.

Bean Outlook:

     Soybean futures have been under pressure recently as traders are bracing for a larger crop this fall.  Expectations are that planted acres could rise to 78.0 million compared to 77.1 in March and 77.2 million a year ago.  Planting is winding down except for soybeans planted behind wheat and is 92 percent done.  Growing conditions are improving with the ratings up one point from a week ago to 65 percent in good-to-excellent condition.  While it looks like smooth sailing now, August could be a different story.  Although domestic demand has been strong for soybeans, exports have been anemic the past couple of months.  Inspections last week were better than expected at 7.8 MB, but China was nowhere to be seen.  For the past five weeks, they have been a no show.  Meanwhile, the trend following funds are less bullish as they trimmed 105 MB from their long position reducing it to 480 MB.

     November soybeans have been trending downward since topping earlier this month at 1333.  Prices fell to 1255 on Monday followed by a bounce to 1284.75 Thursday.  Additional resistance is expected at 1295-1303.  The extent of the decline from 1333 suggests that a rally beyond this level is probably not in the cards.  Unless it happens, the trend is sideways to lower with the potential of falling below the April low at 1186.5.  In this event, a sell-off to 1100 or 1040 is expected and, maybe, 950.  From a seasonal perspective, there is a 63 percent chance of soybean futures working lower though July and bottoming during the first week of August.  Right now, the cycles point to a decline until July 25th or August 23rd.  Next week, the odds are 70 percent that November soybeans will be lower.

 Wheat Outlook:

After a slow start, wheat harvest is picking up steam and is 20 percent done compared to the average of 37 percent.  Yield reports in south central Kansas are coming in better than expected but disappointing in the west.  Exports for the new marketing year are off to a decent start, but inspections last week were less than expected at 14.7 MB.  However, shipments are on track to reach USDA’s projection of 975 MB.  Meanwhile, the trend following funds are more bearish as they added 60 MB to their short position last week increasing it to 295 MB.

December wheat peaked last week at 730.75 and, if you will notice on the chart, broken trend line support of the wedge pattern that has been unfolding since April.  In addition, prices have fallen below the contract low at 688.5 and are likely headed to 655 or 630.  Resistance is expected on a rebound to 705-710.  Seasonally, there is a 58 percent probability of wheat futures trending lower during July and bottoming the first week of August.  Cycle analysis points to a bottom unfolding as soon as July 18th, although it will probably be closer to August 2nd.  Next week, the odds are 80 percent that December 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 mentione