Weekly Commentary – March 6 2015

Corn & Soybean Weekly Recap
Corn Weekly Change
Weekly Corn Commentary for the Week Ending 3/6/2015
By Jalen Pietig, Grain Originator/Field Marketing Advisor
3/6/2015
Contract
Close
Change
% Chg
Highlights: Corn trades sideways again until Friday, when outside
markets, South American progression and technical weakness
pressured.
May 2015
3.8600
-7 ¼
-1.84%
July 2015
3.9400
-7 ¼
-1.81%
The corn market traded rather unenthused earlier in the week, as
Monday saw a drop due to technicals and the South American
crop outlook, followed by three quiet days midweek. Friday
belonged to the outside markets, as the DOW dropped over 275
points while the U.S. Dollar jumped to 12-year highs.
September 2015
4.0125
-7
-1.71%
December 2015
4.1075
-6 ¾
-1.62%
March 2016
4.2000
-6
-1.41%
The news of the week came from Friday’s non-farm payroll report
in the morning, as the report showed that 295,000 jobs were
added causing the unemployment rate to drop from 5.7% to 5.5%.
The numbers sparked the idea that the economy is recovering
faster than expected and that the Fed will seriously discuss raising
interest rates at the June meeting. The U.S. Dollar responded by
trading at a 12-year high, last time I checked it was at 97.725. The
last time the Dollar traded at par was April 2003. The high dollar
means expensive exports on our end, which caused pressure all
day on the corn market.
Weekly export sales were overall better than expected, but below
the last two month’s average. Corn sales were pegged at 32.6
million bushels, and we must average 15.3 mb to reach
expectations. The biggest news on exports, however, is that
Ukraine is meeting with China next month to lobby that China
increase their importation of Ukrainian corn. Ukraine is the 4th
largest exporter of corn in the world.
Now, the focus will shift briefly to Tuesday’s monthly USDA Supply
and Demand and Crop Production reports, where no big changes
are anticipated. Trade guesses:
U.S. 2014/15 Ending Stocks 1.826 bb vs. 1.827 bb Feb
Global 14/15 Ending Stocks 189.67mmt vs. 189.64mmt Feb
Argy corn 23.54mmt vs. 23.0, Brazil 74.62mmt vs 75.0
st
After Tuesday’s report, trade will focus on March 31 Prospective
Plantings, in which USDA is surveying farmers now. May corn is
stuck in a $3.80-$4.00 trading range, currently sits at $3.86.
Spreads
Contract
Close
Change
May15:July15
8 Carry
Unchanged
May15:Dec15
24 ¾ Carry
Widened ½
Dec15:March16
9 ¼ Carry
Widened ¾
Fund Positions
Type
Futures and Options
Included
Contracts
14,200 (-15,300)
Upcoming Reports
March 9
Export Inspections (10:00)
March 10
USDA S&D, Crop Production (11:00)
March 31
USDA Prospective Plantings
Corn & Soybean Weekly Recap
Soybeans Weekly Change
Weekly Soybean Commentary for the Week Ending 3/6/2015
By Jalen Pietig, Grain Originator/Field Marketing Advisor
3/6/2015
Contract
Close
Change
% Chg
Highlights: The truck strike is over, South American harvest is
hammering away, and outside markets don’t offer help as soybeans
slip lower for the first time in five weeks.
May 2015
9.8500
-46 ¾
-4.53%
July 2015
9.9050
-44 ¼
-4.28%
Soybeans closed lower every day this week, confirming that since the
truck strike is over and done that trade focus will be shifted back to
South American harvest. Monday’s trade started with a key reversal
to the bottom side, and every day thereafter followed suit.
August 2015
9.8900
-42
-4.07%
November 2015
9.6525
-32 ¼
-3.23%
January 2016
9.6975
-31 ¾
-3.17%
The end of the Brazilian trucker strike reaffirmed that the South
American ports are flowing and that U.S. export business should be
winding down in a hurry, with additional Chinese cancellations in sight.
Export sales this week were good at 18.3 million bushels. We need to
average 3.4 mb per week to reach expectations. This year’s export
business is right in line with last year’s pace.
Argentine farmers are predicted to stop grain sales from March 11March 13 in protest of 35% export tax on soybeans (ouch) and their
dislike of current Argentine government before October’s presidential
election. The government is implementing new tracking and tax laws
in order to force sales while Argentine producers have been stock
piling soybeans for the past few years to protect against inflation.
The continued rise in the U.S. Dollar is also pressuring soybeans (see in
corn section above), but fund covering seemed to protect against that
today.
th
March 10 USDA S&D, Crop Production trade guesses:
U.S. 2015/15 Ending Stocks 376 mb vs. 385 mb Feb (-9)
Global Ending Stocks 89.47 mmt vs. 89.26 mmt Feb (+0.21)
Argentina bean production 56.88 mmt vs 56.0 Feb (+0.88)
Brazil bean production 94.01 mmt vs. 94.5 mmt Feb (-0.49)
After Tuesday’s report, all eyes will be on the last day of the month,
which has been known to be a market mover.
Spreads
Contract
Close
Change
May15:July15
5 ½ Carry
Widened 2 ½
May15:Nov15
19 ¾ Inverse
Widened 14 ½
Nov15:Jan16
4 ½ Carry
Widened ½
Fund Positions
Type
Futures and Options
Included
Contracts
-23,800 (+5,800)
Upcoming Reports
March 9
Export Inspections (10:00)
March 10
USDA S&D, Crop Production (11:00)
March 31
USDA Prospective Plantings
Corn & Soybean Weekly Recap
3/6/2015
Weather
-Much needed rain showers swept through dry areas of central Argentina, followed by heavy rain in northern
Argentina causing some flooding. Pockets of far eastern Argentina are still dry.
-Prime growing areas in Brazil received rain showers earlier in the week, providing desired moisture for
immature soybeans and second-crop corn. It doesn’t seem as though the rain is heavy enough to be slowing
down South American harvest more than normal.
-Minnesota and The Dakota’s are dry, but none of the “I states” seem to be….
U.S. 6-10 Day Temperature
U.S. 6-10 Day Precipitation
Corn & Soybean Weekly Recap
3/6/2015
Technical Analysis
I find these 20-week moving average charts interesting for longer-term trend forecasting. Each bar shown represents
an entire trading week, and the 20-week moving average is a representation of the average close the last 20 weeks
running. The rule of thumb is to look for two consecutive closes above or below the moving average to signal a
change in trend. Of course, fundamental news drives the technical charts overall, and with spring comes plenty of
fundamental news. However, these charts still seem to be a good tool.
Dec corn: Closed under the 20-week MA for the 2nd consecutive week, closed right at the MA the week before that.
Technically, the corn market is in a sideways trend pushing towards the downside. Next supports are at $4.08, $4.05,
$3.97, then a long drop to $3.65.
Nov beans: Looked to push above the 20-week MA for the 2nd consecutive week, before closing well below the MA.
Another close below the 20-week MA next week would confirm a downtrend. Next supports are at $9.57, $9.51, $9.40,
and then $9.30.
Dec Corn above, Nov soybeans below. These are weekly charts with the 20-week moving average in green.
Each bar (candle) represents one trading week. White candles are positive weeks, black are negative weeks.
Corn & Soybean Weekly Recap
3/6/2015
Last, but not least, the most important news of the week.
Specially-constructed decks of cards were sent to American soldiers who were being held in
German camps during World War II. The United States Playing Card Company collaborated
with the government in the production of these cards so that once the cards became wet,
they peeled apart. Inside, the prisoners found parts of maps that would lead them to
freedom.
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