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Morning Outlook

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Overnight Highlights

Sinking wheat drags corn lower amid a lack of weather scares.Exporters shipped 33.7 million bushels of corn in the week ending April 9, down from 40.9 million the previous week and down from the five-year average for the week of 39.1 million bushels. Marketing year shipments total 951 million bushels, down 41 million or 4% from the previous year. Exporters typically ship 58% of final corn shipments by this point, whereas they had shipped 52% by this point last year. Thus far this year they have shipped 53% of USDA’s target. Shipments to date fall short of the seasonal pace to hit USDA’s target by August 31 by 86 million bushels, versus being short by 83 million the previous week.

Exporters shipped 9.3 million bushels of grain sorghum in the week ending April 9, down from 11.8 million the previous week, but up from the five-year average for the week of 3 million bushels. Shipments to Chinese end users accounted for 8.9 million bushels of the past week’s total.

Marketing year shipments to all destinations total 241 million bushels, up 141 million or 141% from the previous year. Exporters typically ship 61% of final grain sorghum shipments by this point, whereas they had shipped 47% by this point last year. However, they have already shipped 69% of USDA’s recently revised target this year. As such, shipments to date exceed the seasonal pace needed to reach USDA’s target by August 31 by 26 million bushels, versus 24 million the previous week.

Midwest cash basis was generally firm to a bit higher today for corn as processors try to pull supplies out of the hands of tight-fisted producers. This is expected to be the case until farmers feel comfortable with the start of the 2015 crop, which could precipitate an increased flow of old-crop corn and much weaker basis.

The lead May corn contract slipped below pivotal support near $3.74 today, with December trading below $4. Both contracts still have levels of support just beneath them at $3.66 and $3.92 respectively, but the charts are looking increasingly vulnerable.

Soybeans

Soybeans succumb to weakness in the other markets in slow trade.Exporters shipped 16.5 million bushels of soybeans in the week ending April 9, down from 20.9 million the previous week, but above the five-year average for the week of 14.7 million bushels. Shipments to China accounted for 7.2 million bushels of the past week’s total.

Marketing year shipments to all destinations total 1.666 billion bushels, up 162 million or 11% from the previous year. Exporters typically ship 83% of final soybean shipments by this point, whereas they had shipped 91% by this point last year. Thus far this year they have shipped 93% of USDA’s target. As such, shipments to date exceed the seasonal pace needed to reach USDA’s target by August 31 by 187 million bushels, although that is down from 191 million the previous week.

Midwest cash basis was steady to mixed today, with soymeal basis having more of a softer tone. Some processors are positioning for down time for maintenance, reducing their need to buy soybeans as soymeal export demand begins to shift south of the equator.

Soybean futures traded both sides of unchanged today, but were ultimately pulled lower by the other markets. Even so, both the lead May and November new-crop contracts held above the previous day’s lows. This market has the weakest long-term fundamentals of the three major ag commodities, but it’s the one that the funds most like to be long (bought).

Wheat

Weekend rains and wet forecasts for the Central Plains later this week sink wheat futures.Exporters shipped 16.4 million bushels of wheat in the week ending April 9, up from 13.9 million the previous week, but down from the five-year average for the week of 23 million bushels. Marketing year shipments total 720 million bushels, down 282 million or 28% from the previous year. Shipments to date fall short of the seasonal pace needed to reach USDA’s target by May 31 by 19 million bushels, matching the previous week’s deficit.

Wheat futures plummeted today after falling below support at the bottom of their recent ascending channel on the charts. Sell stops were triggered, accelerating losses, with fund managers adding to their massive short (sold) positions. Weekend rains provided valuable relief to southern and eastern portions of the Plains, with rains forecast for Thursday and again in the 11- to 15-day period expected to provide good moisture in remaining dry areas.

The charts suggest more weakness, but traders will now turn to this afternoon’s USDA crop progress report for insight. The trade expects conditions to be stable with the previous week at 44% Good to Excellent.

All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.

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Arlan Suderman | Senior Market Analyst
WATER STREET ADVISORY® | www.waterstreet.org
(316) 729-4599 | asuderman@waterstreet.org

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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