Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Commodity Markets Caught in a Whirlwind
A volcanic eruption, allegations of fraud involving Goldman Sachs regarding the sub-prime mortgage debacle, government intervention in markets, and positive outside market forces e.g., the Dow trading over 11,000; crude prices in the 80s; and the dollar index near 81.7 have all provided volatility to the markets this week with technical signals indicating that prices could move higher in the short term. Commercial buying continues to support the corn market as contracts have recovered most of Monday’s sharp losses. This sets up a test of last week’s high at $3.65 for the nearby May contract. Solid noncommercial buying resulted in May soybean futures closing above resistance near $9.89, which could trigger additional technical buying. Chicago wheat futures were slightly higher with support tied to the rally in row-crops. If the nearby Chicago SRW wheat futures contract can move past last week’s high at $4.91, additional noncommercial short-covering may develop, meaning against all fundamental odds the market could bid higher in the short term.
USDA Weekly Export Sales Report for the Week Ending April 15
Pre-report estimates for weekly export sales of soybeans (combined old-crop and new-crop) ranged from 16.5 million bushels to 23.9 million bushels. The weekly report showed old-crop export sales of 11.3 million bushels, above the 4.8 million bushels needed this week to stay on pace with USDA’s demand projection of 1.445 bb. Total shipments of 15.7 million bushels were also above the 8.7 million bushels needed this week. This report should be viewed as bullish.
Pre-report estimates had weekly corn export sales at 33.5 million bushels to 43.3 million bushels. The weekly report showed export sales of 58.3 million bushels, well above the 22.4 million bushels needed this week to stay on pace with USDA’s demand projection of 1.9 billion bushels. Total shipments of 45.5 million bushels were above the 41.5 million bushels needed this week. This report should be viewed as bullish.
Pre-report estimates for wheat ranged between 12.9 million bushels and 18.4 million bushels. The weekly report showed total export sales of 17.1 million bushels, with old-crop sales of 6.1 million bushels below the 10.5 million bushels needed this week to stay on pace with USDA’s projected 865 million bushels. Shipments of 15.9 million bushels were well below the 26.6 million bushels needed this week. This report should be viewed as bearish.
Market Strategy
Eventually, the anticipated large carry and potentially large to record large production in U.S. and world corn, soybeans, and wheat can be expected to turn these markets lower. Presently, it is important to pay attention to the technical indicators in hopes of achieving better bids for pending sales decisions. Additionally, we are getting near the time period that seasonal rallies generally occur for corn and soybeans due to weather concerns, either real or imagined. Remember too – although it is important to try to time sales decisions, it is also important to make profitable decisions, not necessarily picking the highs or the lows of the market. That said, considering recent volatility in the markets use caution in advancing new and old crop sales. Currently, the weekly export sales report, outside market forces, and seasonality are indicating the possibility of prices turning higher in the short term. On Wednesday, May ‘10 corn futures closed at $3.59; Dec ‘10 corn futures at $3.87; May ‘10 soybean futures at $9.95; Nov ‘10 soybean futures at $9.77; May ‘10 SRW wheat at $4.87; and July ‘10 SRW wheat futures closed at $4.99 per bushel.
For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.