Grains Report - Monday, May 4
WHEAT
General Comments: Wheat markets were lower for the week in SRW and Spring Wheat markets, but held support in HRW markets. The big negative for the market is still better weather for Europe and Russia. Europe has been getting some rains after a prolonged dry spell and Russia is likely to get some very beneficial rains this week. The rains in Russia would come at a time when the crop most needs them, but it is uncertain just how much will fall. Some forecasts call for only very light rains while others call for big rains that would really help the crops. The US Midwest has also seen a lot of rain and a bumper SRW crop is expected. The Great Plains have been a different story and reduced production ideas are floated for HRW areas. It has been hot and dry in central and southern areas after a freeze a couple of weeks ago. The crop suffered Winterkill first and now is suffering under the hot and dry weather. It has been warm and mostly dry in the northern Great Plains and into the Canadian Prairies but the market is less concerned about production potential for Spring Wheat crops. Ideas are that the warmer and drier weather is greatly assisting in the planting progress.
Overnight News: The southern Great Plains should get scattered showers on Saturday and Monday. Temperatures should be above normal. Northern areas should see scattered showers on Saturday and Monday Temperatures will average above normal. The Canadian Prairies should see scattered showers on Friday and Sunday, otherwise mostly dry conditions. Temperatures should trend to above normal.
Chart Analysis: Trends in Chicago are down with objectives of 487 July. Support is at 507, 499, and 488 July, with resistance at 525, 535, and 540 July. Trends in Kansas City are mixed. Support is at 470, 468, and 462 July, with resistance at 489, 496, and 508 July. Trends in Minneapolis are mixed to down with objectives of 482 July. Support is at 503, 497, and 491 July, and resistance is at 518, 520, and 526 July.
RICE
General Comments: Rice was higher in old-crop months and lower in new crop months. May Rice has put on a show as domestic supplies ran low in the cash market. The domestic situation remains tight. New crop months have reflected ideas of greatly increased planted area from producers. Some producers are selling the next crop and some significant hedge selling has been seen in new crop months in futures but this has dried up as Arkansas has been cool and wet for planting. Planting should be active this week in the state and northern sections of the state are reported to be planted already. Mississippi has also had problems planting the crop due to too much rain. Demand for US Rice remains generally positive and the export sales pace, in general, has been very good. Mills and exporters are calling previously bought Rice to keep the market supplied. This is happening mostly in Arkansas as Gulf Coastal areas are mostly sold out of Rice. The weekly crop progress reports showed that southern Rice is emerging well. Some Texas and Louisiana Rice is now in flood.
Overnight News: The Delta should get mostly dry conditions Temperatures should be generally below normal.
Chart Analysis: Trends are mixed. Support is at 1444, 1432, and 1403 July, with resistance at 1504, 1548, and 1562 July.
CORN AND OATS
General Comments: Corn was lower early in the week, but held support and bounced late in the week. It is possible that futures have seen at least a short-term low. The main fundamental remains demand destruction caused by the lack of ethanol demand and the lack of feed demand. Both have been detrimentally affected by the Coronavirus. The virus has caused states to impose stay at home orders on its people, meaning no one is driving and consuming gas. Russia and Saudi Arabia have said that world Crude Oil production would be 10 million barrels a day less did little for the market as consumption is even less. Some states are starting to open now in the US but it is unclear if the people will move out and enjoy life as before. The experience in other countries suggests that the people will be very cautious in any activities and really not go out and spend money or hit the stores as before. Driving will be significantly less either way. Feed demand has been reduced as packers have been forced to shut plants down due to infected employees in the plants. President Trump signed an order forcing the plants to reopen with protections from lawsuits and with protections for employees, but it is unclear if the employees will go back to work at this time. Wholesale beef and pork prices are up sharply, but cattle and hog producers are seeing very cheap prices and are liquidating herds. Corn demand has been significantly reduced.
Overnight News: Unknown destinations bought 115,800 tons of US Corn
Chart Analysis: Trends in Corn are mixed to down with no objectives. Support is at 301, 328, and 295 July, and resistance is at 308, 315, and 323 July. Trends in Oats are mixed to up with objectives of 288 and 294 July. Support is at 281, 278, and 275 July, and resistance is at 308, 315, and 323 July.
SOYBEANS AND PRODUCTS
General Comments: Soybeans and products closed higher last week. Soybeans found support after some significant purchases from China. China used the break in prices to buy at least 300,000 tons of US Soybeans and possibly more. The news buoyed a market in search of demand. The demand has been slow otherwise with the significant competition from Brazil. The Real has weakened a lot against the US Dollar and Brazil producers can sell at very high prices in the local currency. Meanwhile, Soybean Meal demand has been supported by logistical issues in Argentina. The Parana River has been very low and ships are not able to load the full amount of Soybeans or products. Demand has shifted to the US and also to Brazil. Improving rains in southern Brazil and northern Argentina offer hope for improved logistics in coming weeks. The export meal demand has helped keep the US crush very strong. Domestic meal demand has suffered along with the demand for Corn due to reduced feed demand caused by the Coronavirus and the problems it has caused feed operations.
Overnight News:
Chart Analysis: Trends in Soybeans are mixed. Support is at 841, 830, and 818 July, and resistance is at 857, 861, and 868 July. Trends in Soybean Meal are mixed. Support is at 290.00, 286.00, and 283.00 July, and resistance is at 296.00, 298.00, and 301.00 July. Trends in Soybean Oil are mixed. Support is at 2560, 2510, and 2480 July, with resistance at 2670, 2820, and 2910 July.
CANOLA AND PALM OIL
General Comments: Palm Oil and Soybean Oil were higher last week and Canola was also higher. Palm Oil and Soybean Oil were hurt by the lack of biofuels demand, but the demand loss appears to be part of the market price now. The same factors affecting ethanol demand are affecting demand for other biofuels. People are driving less due to the Coronavirus and even reduced Crude Oil production has not been enough to lift prices to profitable levels for biofuels producers. Palm Oil had found some support from reduced production potential in Southeast Asia as workers are affected by the Coronavirus. Meanwhile, Canola has found support from the recent recovery in Soybeans and Soybean Oil along with a weaker Canadian Dollar. Canola is more of a food oil than the others, although it also has biofuels uses. China has recently allowed Canadian Canola imports to resume, so demand could soon improve. Weekly chart trends have turned up in this market.
Overnight News:
Chart Analysis: Trends in Canola are mixed. Support is at 464.00, 462.00, and 459.00 July, with resistance at 468.00, 471.00, and 474.00 July. Trends in Palm Oil are mixed to down with objectives of 1970 and 1710 July. Support is at 2030, 1990, and 1970 July, with resistance at 2120, 2180, and 2230 July.
Disclaimer: Past results are not necessarily indicative of future results. Investing in futures can involve substantial risk of loss & is not suitable for everyone. Trading foreign exchange also ...
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