Archive | March 1, 2010

Wheat Market Commentary – 2010.03.01

by on March 1, 2010

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NEAR-TERM MARKET FUNDAMENTALS: Wheat followed equity and commodity markets higher to start the overnight session, but then sold off to below Friday’s close in conjunction with a sharp rally in the dollar. The early strength took the May contract above Friday’s highs to the highest level since January 19th. This came after trend-following funds again trimmed their large net short position on the latest Commitments of Traders report. The report showed Non-Commercial no CIT traders (trend-following funds) as net buyers of 2,135 contracts reducing their net short position to 63,168 contracts. Index funds were net buyers of 3,954 to increase their holdings to 97,758. The Farm Minister of India again called for a good winter wheat crop in comments on Friday. He indicated that this is expected to help cool the recent sharp run up in domestic food prices. Iraq reported on Sunday that it bought 380,000 tonnes of wheat on a tender that closed one week ago. This was more than expected last week. Thailand plans to buy 80-100,000 tonnes of wheat according to trade sources. Vietnam is expected to ship only 400,000 tonnes of rice in March which is down 48% from last year. A major trading company in Japan has indicated that it is considering entering the Russian wheat market. This follows comments by Russian officials last week that they intend to aggressively pursue Far Eastern wheat sales during the next two years.

TODAY’S GUIDANCE: The failure to hold the early overnight gains indicates that wheat will need support from a lower dollar or else general buying in commodity markets if it is to continue moving higher. Next resistance is at 527 3/4 in the May contract and then as high as 541. First support is near 503 3/4 and then near 495.

Soybean Market Commentary – 2010.03.01

by on March 1, 2010

Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

NEAR-TERM MARKET FUNDAMENTALS: A strong US dollar, a continued shift in the demand for soybeans from China to South America and ideas that cash markets will weaken as the South American harvest progresses helped to pressure the market overnight. Talk of a wet spring and seasonal buying from speculators plus end-of-month buying helped support the market last week. China’s Ministry of Commerce cut their forecast for February imports to 3.32 million tonnes, down 18% and also lowered their forecast for March imports to 3.32 million tonnes, down 14% from last year. Argentina soybean prices at Rosario, Argentina closed at an 11-month low of $224/tonne. For May delivery, prices are at $218/tonne. The Commitments of Traders Futures and Options report as of February 23rd for Soybeans showed non-commercial traders were net long 19,179 contracts, an increase of 5,456 contracts. In the CIT Supplement report, commodity index traders held a net long position of 169,966 contracts, down 1,434 contracts for the week. In oil, non-commercial traders were net long 19,122 contracts, an increase of 1,664 contracts. Commodity index traders held a net long position of 97,758 contracts, up 3,954 contracts for the week. For the 12 agricultural markets covered in the supplemental report, index funds were the strongest buyers of oil. For meal, non-commercial and non-reportable combined traders held a net long position of 35,627 contracts, up 6,288 contracts in the net long position for the week. Aggressive fund buying in soybeans and oil and a more positive tone for outside markets helped support solid gains on Friday. Traders said that a lower dollar and sharply higher crude oil helped to boost the soybean complex. Funds were also consistent buyers over the course of the day with talk of a wet spring and ideas that the market is a bit oversold helping to support. Weather has been dry in Argentina at the end of the week last week and into today but there could be some scattered rains for Tuesday through Thursday this week before warm and dry conditions return on the weekend. This appears to be near ideal for Argentina crops drying out from late February hefty rains. Brazil is seeing unwelcome rains stretching from the south central growing state of Parana up into Mato Grosso which may keep harvest slow. The USDA announced a sale of 113,000 tonnes of soybeans to China on Friday but delivery is 2010/11 season. Taiwan is tendering to buy 40,000-60,000 tonnes of US or Brazil soybeans this week. Argentina appears set to begin blending 5% bio-diesel with diesel. Argentina produced 1.2 million tonnes of bio-diesel in 2009 which was exported and the industry is expected to produce near 1.6-2.2 million tonnes for the coming season.

TODAY’S GUIDANCE: Corn may see a boost from wet weather this spring but it is a tough case to support soybeans as late plantings would boost soybean acres. We remain bearish and believe bounces are still selling opportunities. Selling resistance for July soybeans is at 972 1/2 with 946 3/4 as light support and 893 as downside objective. Use 881 3/4 as next downside objective for November soybeans with 942 resistance.

Corn Market Commentary – 2010.03.01

by on March 1, 2010

Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

NEAR-TERM MARKET FUNDAMENTALS: The corn market continued to extend its recent gains during the overnight session with the May contract pushing to its highest level since January 14th. This came despite a strong move higher in the dollar and the lingering effects of last week’s negative US economic data in the areas of jobs and housing. Traders indicate that relatively light farmer selling after the January-February break and fair feed demand is helping to generate a short covering rally in futures. One analyst also indicated that the move to the net short side by trend-following funds in January and early February is mow seeing a minor reversal. The Commitments of Traders report for the week ending February 23rd showed strong buying by Non-Commercial no CIT traders, also known as trend-following funds. They were net buyers of 20,348 contracts to switch their net position to net long 18,105. Index funds were net buyers of just 206 contracts, but their long position is still near its all-time high at over 447,000 contracts. The corn market saw a pause in its advance during the middle of last week, with some traders crediting that to poor economic numbers in the US. However, last week was bracketed by a very strong rally on Monday and an advance to a new high for the week on Friday. Weather in Argentina was dry again over the weekend as expected. Forecasts call for mostly dry conditions into the first half of this week with temperatures at normal to somewhat above normal levels. This is considered favorable for the corn crop as it advances through the filling stage and the crop nears harvest in some areas. Weather in the US is expected to clear somewhat this week allowing for unrestricted corn movement in most areas. Traders continue to see expectations for a wet spring and slow planting progress to benefit corn at the expense of soybeans. Cash markets are developing a two-tiered pricing structure as corn processors and ethanol plants bid up for higher quality corn and lower quality corn is pressured due to an excess supply of lower quality corn. Traders are nervous that as the weather warms up in the weeks just ahead that more corn will spoil.

TODAY’S GUIDANCE: Look for the steady advance to continue in a corn market where managed funds may be looking to boost their very small net long position. The fact that the market held up so well amid poor economic data last week may indicate that corn is either moderately oversold, or perhaps benefiting from a resurgence of mild inflationary concerns. The 100-day moving average is near 400 in the May contract this morning and that appears to be where we are headed. First support remains near 383 and 379 with resistance is at 395 to 403.