Morning Futures Roundup
Mixed Signals From USDA Supply/Demand Report
Grain traders have barely recovered from the planting intentions report when the USDA released its data for the April crop production and supply/demand report on Tuesday. The report contained a few surprises, most notably leaving the 2011-12 Corn carryout estimate unchanged from the March report at 801 million bushels. Analysts were looking for a nearly 85 million bushel reduction in carryout given the much lower March 1st Corn stockpile estimate. There are many theories being floated around as to why the USDA kept the Corn carryout unchanged, based on thoughts that early spring Corn plantings will allow some new-crop Corn to reach maturity prior to August 31st in some southern areas. This would allow the early harvested Corn to be counted in this year's carryout totals. Some traders believe the USDA is uncomfortable lowering carryout totals below 800 million bushels, as this would indicate Corn supplies would become extremely tight prior to the fall harvest.
The view for the Soybean market was moderately bullish, with the USDA lowering Soybean carryout by 25 million bushels from the March estimate to 250 million bushels. World Soybean carryout was lowered to 55.5 million metric tons, down 1.8 million tons from the March estimate. The South American Soybean production totals continue to be revised lower with a 2.5 million metric ton decline in Brazilian Soybean production estimate and a 1.5 million ton drop in the Argentinean harvest.
Looking at the daily chart for July Corn, we notice prices now trading well below both the 20 and 200-day moving averages, as the rally triggered by the prospective plantings report has started to fade. The 14-day RSI has also turned weak, with a current reading of 42.09. The most recent Commitment of Traders report shows large non-commercial traders surprisingly lightening-up on their net-long positions of April 3rd, though much of this may have occurred just prior to the release of the prospective plantings report. The next support point for July Corn is not seen until the March 29th low of 602.50, with resistance seen at the recent high of 659.75.
CLICK HERE FOR THE FULL-SIZED CHART
This article is provided for informational purposes only. No statementin this article should be construed as a recommendation to buy or sell asecurity or to provide investment advice. The content provided has beenobtained from sources deemed reliable but is not guaranteed as toaccuracy and completeness. optionsXpress makes every effort to providetimely information to its recipients but cannot guarantee specificdelivery times due to factors beyond our control.
Derivatives involve substantial risk and are not appropriate for all investors. Please read the "Disclosure Statement for Futures and Options" prior to investing in futures or options.
For investments using a straddle or strangle options strategy thepotential loss is unlimited. Multi-leg option strategies are subject tomultiple commissions. Profits may be eroded by the commission expendedto open and close the positions and other risks apply.
View Mike Zarembski's post archive >