Corn Covering our demand side reports first, our Monday weekly export inspection report showed 29 million bushels of corn was inspected for near term export; off 9 m.b. from the week prior. This was expected after our recent price high last week was a four month high. Year to date inspections are up 18 m.b. so, we continue on a recovery of demand after a weak 2005 marketing year but there is a long way to go as we look to be sitting on 2.4 billion bushels at the start of our 2006 fall harvest and that is the second highest ending inventory since 1987. Thursday’s weekly export sales report showed 1.197 m.m.t. of corn was sold last week, off 25% from the week prior and a year ago but well over a year ago of 786 t.m.t. Asian sales were 650 t.m.t. versus 800 the week prior. Though under last week’s report, it is still a slightly friendly demand signal as Asian sales remain robust even with continued bird flu virus concerns. Note, over 70% of our exportable feed grains go to Asian markets so, we need to continue to watch demand there. After hitting 5 month highs last Thursday, we saw profit taking of 10 cents lower into Wednesday low before large trading funds came back in buying pushing us back up 9 cents off Wednesday’s low. No one, wants to be short corn as the trade mindset is were heading for much improved demand in 2006 while production looks to decline. The March 31st planting acreage report maybe the biggest report of the year as there is such a wide trade guess on corn acres to be planted this year. The range goes from 1.5 million acres less to 4 m.a. Near term we will follow beans lead as weather in south America the next two weeks will make or break the yields there. When we come in Tuesday, after our 3 day holiday the thinking from the weather site wxrisk.com is we will see a cold front coming into Argentina late Wednesday through Saturday and moving into Brazil late week that will bring appreciable rain to recently dry bean fields. This of course will take bean lower with corn in Iraq. If it fails and we stay dry corn’s following beans higher. On the futures near term May corn has support at 2.29 with resistance at 2.37 then 2.40. Buy support next week option players long term consider buying the 2.50 September call and sell the 3.00 for 10 cents or $500. Total cost and risk with $2,500. profit potential and a time frame that takes you through the growing season. Also, you can buy the April 2.30 corn put for 3 or 4 cents or $150. for downside insurance through late March.
Bean We started the week with Monday’s weekly export inspection report showing 34 m.b. were inspected for near term export up 12 m.b. from the week prior and 8 m.b. over a year ago. We should expect a better demand number as beans closed lower on the week but unless we turn hot and bone dry into March over South America, exports will be lost to Brazil in March and April. Brazil’s crop expected to come in 6 m.m.t. bigger than the year prior has led inspections for new shipment here off 161 m.b. on the year. Thursday’s weekly export sales report showed 529 t.m.t. of beans were sold last week up 2% from the week prior, 23% under our four week average but over a year ago of 379. china was in for 360 t.m.t. Not a bad demand signal but not a good one either. The trade viewed it as neutral at best. The demand side of beans from now through May depends on weather into mid-March. Hot and dry in south American and China will turn to the US to fill needs yet timely rain and China will cancel previous purchases for March to May shipment and switch to South American ports for cheaper beans. After profit taking into Wednesday low we saw buying strength late Wednesday into Friday as Argentina was dry all week. Brazil’s rain totals were disappointing. It is all about weather in South American again next week as bean fields finish off their key growing cycle into early March. If we come in Tuesday after our Monday holiday closing and they see South American warm and dry into the week end, March beans will take out our 6.10 major resistance with 6.25 as next resistance. Wxrisk.com see a strong cold front coming into Argentina by Wednesday and Brazil late week with potential for big rains. If this hold true look for March to test 5.70 support. It is three days before we open next and the jet stream can buckle and twist 3 different times before then so go to our overnight market Monday night at 6:30 p.m. opening as the trade will have covered every internet weather web site and either be buying or selling accordingly and will be pricing in results.
Wheat The first report of the week was Monday’s weekly export inspection report showing 16.3 m.b. of wheat was inspected for near term export, down 9 m.b. from the week prior and equal a poor number from a year ago. Inspections are down 33 m.b. on the year. Thursday’s weekly export sales report showed 593 t.m.t. of wheat was sold last week up from 351 the week prior and just over a year ago of 5.50. The better sales came on higher prices last week which is rare but closer look shows sales of wheat to Asian customers were 250 t.m.t. Asian countries more concerned about quantity than quality are probably buying lower quality feed wheat to blend with higher quality wheat to get a mutant blend for breads and human consumption. Sales are sales but I would not expect to see it every week, but at least for this report it is a friendly demand signal. After hitting 4 month highs last week Thursday large trading funds took profits this week declining 25 cents into Wednesday low before bouncing but with weather over our winter wheat states being generally bad new buying surfaced Thursday and Friday’s opening on talk of freezing temperatures as well as icing this week end in Texas and Oklahoma with near zero temps in Kansas and Nebraska. So, many of the fields of dormant wheat have little to no snow cover to insulate the wheat from mother nature’s wrath. This sure will lead to further declines in crop condition ratings. The near term has support on March futures of 3.55 and resistance 3.65 then 3.81 if we get a close over 3.65. For those who expect the drought in southwest to continue as we break dormancy in March and grow into our April period May harvest can consider this buy the July 390 wheat call and sell the July 4.40 call for 14 cents or $750. cost and risk. It gives you 50 cents profit potential and time all the way through harvest. For downside insurance buy the April 3.70 put for 4 cents or $200.
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