April 27, 2015

Wake Up Call

Planting Progress And Technicals Leave Corn Vulnerable

Good Morning! Paul Georgy with the early morning commentary for April 27, 2015 at 5:15 am.

Grain markets are mostly lower pressured by favorable planting weather for the week ahead. The lower close last Friday has technical traders looking for further downside potential in corn. The Dollar is higher and crude oil is lower creating more headwinds for grains.

Weather’s Impact on Grains This Year: As planting continues throughout the US, we’ll update our weather outlooks in our next live webinar, on Tuesday, April 28th, 2015.  Register Here

Update – Morning Coffee Commentary:

In the week ahead grain traders will be waiting for the planting progress numbers this afternoon. We are hearing expectations of 18 to 25% of the US corn acres planted which would compare to 28% average. This afternoon we should see our first soybean planting progress number where estimates are coming in at 3 to 4% compared to 4 % average. Winter wheat conditions are expected to improve by 1 to 2% in the Good/Excellent category.

The week ahead has an active calendar on the economic front with Consumer Confidence on Tuesday, FOMC meeting results on Wednesday and several other reports on Thursday and Friday.

Friday’s CFTC Commitment of Traders report showed managed money increased short positions in corn by 16,986 to make them net short 65,298 contracts. They also were net sellers of 14,502 contracts of wheat which put them at a record short position of 96,624. Managed money funds were net buyers of 34,211 contracts of soybeans making them net short 47,505 contracts. In livestock funds bought 2,407 contracts of hogs and sold 4,504 contracts of cattle.

Cash bids for soybeans and corn are holding steady as farmers resist the weaker futures prices. This week farmers will be focused on getting a crop in the ground not marketing grain.

Dave Toth from RJO Market Insight says the following about July corn futures, “Friday’s clear break of the past month’s support between 3.77 and 3.75 reaffirms broader bearish count that now exposes accelerated losses and possibly the resumption of the secular bear trend. Thursday and Friday’s resumed break leaves Thursday’s 3.85 high in its wake as the latest smaller-degree corrective high and new short-term risk parameter this market is now minimally required to recoup to even defer, let alone threaten the bear. In lieu of such 3.85+ strength, further and possibly accelerated losses are expected straight away with former 3.77-area support considered new near-term resistance.”

The Cattle-on-Feed numbers are considered bearish and we would expect a lower opening especially after the sharp rally late last week. The on-feed and marketing numbers were in line with trade expectations. However the placements were more aggressive than expected at 100.4% of a year ago compared to trade average estimate of 94.5%. After looking at the placement breakdown it suggests late summer beef production could see a sizeable jump as the heavy weight cattle placed were up 14%. Adding the increased weights of cattle going to market, total beef production will be above year ago levels. Seasonally, production is expected to increase through the second quarter.

Beef prices and pork have already started their price adjustment as wholesale beef values have dropped sharply while pork and chicken stabilize.

Dressed beef values were weak with choice down 3.02 and select down 3.42. The CME Feeder Index is 212.97. Pork cutout values are up .27.

Markets as of 5:15 AM CDT          

  • May Corn   -1 3/4    
  • May Beans + 1/2     
  • May Wheat   -1
  • May Soymeal -.80
  • Jun Dlr     +.29
  • Jun S&P   +3.25
  • Jun Crude   -.31
  • Jun Gold   +7.20

Technical Chart of the Day

daily chart

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