If you would like to receive our technical comments including price projections and cycle analysis for important tops and bottoms, click on the link at the bottom of the commentary to sign up for a 30-day free trial subscription. Follow Ag Watch Market Advisors on Facebook and Twitter for timely information not posted in
Corn Outlook:
As the calendar turns to March, spring fever will spread among producers and traders alike. That said, the focus will be on planting and weather in the weeks ahead. Meanwhile, the speculative crowd has been smitten by spring fever as their long position in corn has risen to nearly 3.5 BB. Justifying a position of this size is difficult, especially with USDA’s forecast in the Ag Outlook Forum of corn acres at 94.0 million and ending stocks of 1.965 BB. Furthermore, with the prospect of a 25 percent tariff imposed on Canada and Mexico next week, plus an additional 10 percent on China, and exports just holding their own to meet USDA’s projection of 2.450 BB, a weather scare during the growing season will probably be needed to sustain the funds bullish stance.
Bean Outlook
Price gains in soybeans may be difficult to sustain even with the USDA lowering acres to 84.0 million and ending stocks to 320 MB in the Ag Outlook Forum. This is because private sources forecast Brazil’s production at a record 168.2-171.3 million tons. Furthermore, Brazil’s prominence in exports continues to grow, as they fulfill 58 percent of global needs compared to 27 percent for the U.S. Looking at exports, inspections last week exceeded the previous week at 31.5 MB with China taking 17.7 MB. However, since mid-November, the export pace has declined 60 percent, while deliveries to China have fallen nearly 73 percent. Currently, the short position of the funds has risen to 170 MB, but there may be little reason for them to cover unless weather becomes a factor this season.
Wheat Outlook:
Later next month, the winter wheat crop will emerge from dormancy which means the market will be more sensitive to weather. Currently, the funds are short 365 MB but probably have little incentive to cover as the USDA increased acres to 47.0 million and ending stocks to 826 MB in the Ag Outlook Forum. Meanwhile, exports for most of the season have been erratic. Last week, inspections exceeded the previous week at 13.7 MB but were below the average of 20.7 MB that must be shipped each week to reach USDA’s target of 850 MB. There have only been five occasions this marketing year that exports have been above 20.0 MB, which means that their projection is unlikely to be met.
Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned