by Duane Lowry
Thursday, April 21, 2016
Corn quickly rejected “difficult to explain" overnight strength, finishing 10 cents lower in a 19-cent reversal-down trading session. Today’s action will be seen as an end to the self-energizing euphoric price strength seen during the past several sessions. Producer selling has been active and we should expect it to continue to be found on price recoveries into the zone between today’s highs and today’s settlement. Tech-based selling interest will surface on recoveries towards yesterday’s settlement. We will experience some planting delays during the next couple of weeks, which may be used as fodder for any near-term price bounces from today’s settlement. The swiftness and steepness of the recent rally during this time of year, especially since we really don’t have any concerning weather storylines, warns me not to get too excited about buying weakness. IF the US planting season goes well, we now have a price peak from which we could easily erode from during the next 30-60 days. Producers need to remain engaged, searching for sales opportunities that work well for their own operations.
Soybeans also quickly failed to hold the strange overnight strength, falling rapidly during the early minutes of the day session, only to spend much of the balance of the day steadily recovering to settle up 8 1/2 cents in the July contract, but down 1 1/4 cents in the November contract. Today’s volatility produced a 32-cent trading range. Today’s price action will be seen as signaling the end of the recent bizarre feed-on-itself price strength of the past several sessions. Producers have been active sellers and justifiably so during the past few days. Expect tech-based selling interest to surface and build confidence, limiting any testing or probing of today’s highs. Longer-term support will be found approximately 60-70 cents below today’s settlement. Expect that support zone to be tested at some point during the next several weeks.
Wheat also rejected the overnight strength, settling down 8 3/4 cents in reversal-down fashion. News is limited. Inter-market spreads could see wheat give back some of its recent gains on corn during the next several days, making wheat possibly the weak link vs corn during the next several days. Expect tech-based selling to surface on intraday recovery attempts. Longer-term support and buying interest will begin approximately 20-25 cents below today’s settlement.
In summary, producers have been given much better selling opportunities than most of them expected to receive at any time during this year’s growing season. Producers had been slow sellers of old-crop corn and all new-crop positions for much of the past several months. Many used this price rally to make up for those several months of limited activity and many have now been able to get some new-crop price protection as well. Producer selling will continue to be found on any price recovery attempts that reach back to yesterday’s settlements in corn. I think producers are willing to make both old and new-crop soybean sales at today’s settlement values. We have a lot of growing season ahead and who knows what it will bring. However, we all need to realize that recent upside euphoria may be difficult to rebuild/sustain if price tones begin to stall-out and/or weaken from here. Often times if we start out the planting season well, it is difficult to build a bullish crop threat storyline until after mid-June. That means we COULD have 60 days to think back to how we wished that we had made sales on April 21st. **On a little side note, today’s action in Gold and the US Dollar, to me, offers confirmation/weight to the idea that we may see pressure on commodities as a complex in the weeks ahead. For those that wanted to try to explain recent gains in ag markets to hopes/expectations that crude oil would continue to rally and was a bullish sign to all commodities, today’s action could be quite disappointing. **I see a lot of signals that warn us to be prepared for a return of bearish sentiment to the ag markets during the next several weeks, especially if we avoid a legitimately concerning planting/early development storyline. At 1:15: Crude= down $0.64, Gold= down $3.70, Dow Index= down 110 and the US Dollar= up 9, July Corn down 10 cents, July Soybeans up 8 1/2 cents and July Wheat up 8 3/4 lower.
WEATHER: Midday weather forecasts were largely unchanged from this morning’s discussion.
*Export Sales data released at 7:30 this morning: Wheat= 621 tmt, vs estimates of 0-550 tmt, Corn= 1202 tmt, vs 1000-1400 tmt, Soybeans= 746 tmt, vs 200-600 tmt.
Thursday night's grain trade outlook: Today’s trade will be seen as confirmation that the recent “difficult to explain" euphoria may have ran its course. This is likely to lead to more aggressive selling interest on small intraday recovery attempts. Expect a weak tone, led by soybeans.
Humor/Quote of the Day:
Tell me a musician who’s got rich off digital sales. Apple’s doing pretty good though, right?
Compassion is an action word with no boundaries.
This newsletter is prepared from information believed to be reliable. Early Market News, Inc. does not guarantee that such information is accurate or complete and it should not be relied upon as such. Opinions expressed are subject to change without notice.