Morning Futures Roundup

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Mixed Signals From USDA Supply/Demand Report

   Fundamentals
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.

   Technical Notes
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.
    
   
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