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Published April 26, 2010, 01:22 PM

Soybeans rally to three-month highs

The wheat exchanges started the week lower. Pressure from a lower corn market spilled over to pressure the wheat. A stronger U.S. dollar did add to the selling pressure. Fund selling added pressure as most were looking to take profits on the past few weeks’ strength. In addition, traders were positioning ahead of the April 19 crop progress report, which should show decent seeding progress for spring wheat as well as strong crop ratings for the winter wheat.

By: Ray Grabanski,

Wheat

The wheat exchanges started the week lower. Pressure from a lower corn market spilled over to pressure the wheat. A stronger U.S. dollar did add to the selling pressure. Fund selling added pressure as most were looking to take profits on the past few weeks’ strength. In addition, traders were positioning ahead of the April 19 crop progress report, which should show decent seeding progress for spring wheat as well as strong crop ratings for the winter wheat.

The April 20 session had wheat opening higher and extended the session’s gains throughout the session. By the close, most of the months were posting gains that were almost as large as the April 19 losses. The wheat market continues to impress all with its ability to rally. Fundamentally, wheat really has nothing bullish in its favor (poor demand, improving winter wheat conditions and ideal planting conditions for spring wheat), yet the wheat exchanges have been able to rally up to resistance levels. The only positive for wheat: The funds are holding extremely large short positions, so the market is susceptible to short covering. Wheat also has been a very good follower to the corn and soybean complex, so if they are going to trade higher, wheat will take the path of least resistance and follow.

By midweek, the wheat market was struggling again. The wheat exchanges did try to trade higher April 21, but every time the market recovered to trade with gains, another round of selling stepped in to push the market lower. There continues to be nothing fundamentally positive for wheat, and the April 21 session was a good example that wheat does not have to trade higher even when the other grains are higher. Some of wheat’s lackluster session could be blamed on a higher U.S. dollar, but overall, there just is no reason for wheat to push higher with large stocks, aggressive planting progress and improving winter wheat conditions.

The April 22 session had wheat struggling early in the session but once wheat found its footing, it was able to trade to seven-week highs. Technical buying by the funds combined with short covering to help push the wheat higher. Fundamentals remain bearish for wheat, but the technical picture, after this past week’s rally, looks promising. Most of the support was a result of fund buying as the funds offset previous short positions. USDA’s export sales report was not seen as supportive for wheat and was the main reason for the market to stumble at the start. But buying returned to the market and the gains were exaggerated by slip-over support from the strength from the other grains as well as from buy stops (which only helped to accelerate the session’s gains). The buying spurt was enough to push the wheat up to minor resistance. It will be interesting to see if the recent strength can continue and be strong enough to push wheat through the resistance level, which could open the market up for further gains.

Corn

To start the week, corn opened 6 cents lower and eroded from there, finishing the day down 16 cents. The market opened lower April 19 because of a lower overnight market and negative outside markets. We had a good run in this market last week, but the focus in the market was the planting progress report that came out April 19. Estimates ranged from 16 percent to as high as 30 percent of the crop planted as of April 18 and that pressured corn. The highest planted acreage on record for this date is 20 percent and that happened in 2004. The progress report stated that 19 percent of the corn has been planted, with 3 percent one week ago and a five-year average of 9 percent. Planting conditions have been good. The export inspection report was seen as neutral for corn, having no affect on the market.

The corn market opened 4 cents higher April 20 and firmed as the day went along, closing up 7.75 cents. Crude oil was higher and the dollar was weaker to support the corn through the session. Also, the market felt that the 19 percent of the corn that is in the ground came in under most estimates and was supportive to the trade. On the other hand, we are in the field early this spring and the record planted acreage was 20 percent as of this date in 2004. You may remember 2004 as that was the year that the U.S. set the record for total corn production. Corn planting is going well as we plant one of the highest acreages in more than 60 years.

The corn market opened 3 cents higher April 21 and then moved to 6 cents higher by midsession with the strength in the soybean complex. The futures did back off from there, but still ended up 3.75 cents. The main support in the corn market was the strength in the soybeans. As soybeans climbed as much as 20 cents higher, it pulled the corn with it. There also was carry-over buying interest from Tuesday’s move and some short covering. The outside markets provided little direction. Fundamentally, there is little reason for the market to rally. We have excellent planting conditions, the largest projected acreage to be planted since 1947 and some rain that may move in.

The corn market opened 1 cent lower April 22, but firmed up as the day went along to close up 3 cents. The lower crude oil market and the stronger dollar weighed on the market early in the session. But, the export sales report was bullish for corn, and that added support. Also, the strength in the soybean market pushed corn higher. We have had a good run in the corn the past week. On the other hand, Informa came out with its prediction that the 2010 crop will be larger than the 2009 record crop of 13.13 billion bushels. Also, planting progress has been good, along with a favorable weather forecast that does have some beneficial rain in it.

Soybeans

Soybean’s started the week trading lower as the April 19 session ended with about 10-cent losses. Light pressure was a result of a stronger U.S. dollar, but most of the selling was tied to profit taking and fund selling as traders took profits on the past few weeks’ strength. The April 16 strength was enough to push the soybeans to three-month highs and through resistance levels. But traders thought those gains were slightly overdone, especially because of a negative fundamental picture. Exports have been the only saving grace for the soybean complex, but even those are starting to slow down.

The April 20 session had the soybean complex starting the session higher. By the close, the soybean complex had erased virtually all of the April 19 losses. The lack of farmer selling and strong domestic demand helped to encourage strength. Additional buying was supported by thoughts that April 19’s losses were overdone. The new crop contract was supported by news that China was in and bought a bit more than 8 million bushels of new crop 2010 soybeans from the U.S. Demand for U.S. soybeans continue to be strong, and that has helped to keep the old crop month’s firm as well. The entire soybean complex seems to be showing some concern that the 2010 planted acreage of soybean could decline because of farmers planting more corn, especially when planting is going as close to ideal conditions as it has been. The only concern: Soybeans are trading up against resistance levels and that could result in some selling pressure.

The soybean complex opened April 21’s session mixed but with most months on the higher side. It did not take the soybean complex long to jump to be posting more than 20-cent gains. Most of the early strength was a result of continued strong demand for U.S. soybeans. For the second morning in the row, China was in buying U.S. soybeans. This helped to support the soybean complex, but most of the buying was from funds. Once the soybean complex traded above resistance levels, buy stops were hit, which helped to accelerate the session’s gains. The buy stops were enough to push the old crop contracts above $10 and to highs not seen since mid-January. Planting progress for corn and spring wheat has been as close to ideal as it can be for late April and some of the strength in the soybean complex could be a result of soybeans trying to stay on producers minds. The soybean complex did sell off the highs, slipping down to end the session with less than half the day’s gains.

The run in the soybean complex continued during the April 22 session. The soybean complex started the session higher and rallied to post strong gains. By midsession, the soybean complex seemed to run out of buyers as the market traded in a range between 5-cent gains to 5 cent losses. But late in the session, another round of buying stepped in to push the soybean complex to end with good gains and with the front three months above $10 and the November contract at $9.85 resistance. The funds continue to be the big buyers of the soybean complex as many position themselves ahead of April 23’s May option expiration. Light support continues to come from strong export demand

Barley

Cash feed barley bids in Minneapolis improved to $2.05. Malting barley bids remain at $3.

Durum

The big news that has hit the durum market came from USDA in the form of increased loan rates. USDA increased durum’s loan rate about $1.50 in most counties. The durum loan rate in Cass County, N.D., increased from $4.81 to $6.

Canola

Canola futures on the Winnipeg, Manitoba, futures closed lower for the week ending April 22. The canola market seemed to be off in its own world, virtually ignoring the activity in the U.S. soybean complex. Not to say the U.S. soybean direction did not help influence the canola, but its influence was very muted. For the week canola, dropped $3 to $3.50 (Canadian). A stronger Canadian dollar and ideas that planting progress is moving along at a fast pace, even though North Dakota is not reporting canola planting progress compared with the five-year average of 2 percent, kept pressure on the canola market all week.

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