Kleist Comments

MORNING GRAINS 5/2/14
MORNING GRAINS 5/2/14

May 9th USDA S/D report.

Corn:
Exports: Sold Unknown 101,600t old crop.
Comments: Looks like the markets will calm down ahead of the weekend perhaps as the electronic trade indicating. Weather forecasts suggesting better planting conditions in most Midwest areas but rain an on and off problem northern plains. Ukraine/Russian situation grows more tense on reported killings in south Ukraine and Russia’s warning to Ukraine to stop any military action…or else? Let Europe put some economic sanctions on Putin’s distant cousin and his man servant, that’ll due it. Open interest fell 5400 with May/July of a combined 13,000 amid good volume. The corn market near term has been seeing very good demand and the main influence of being able to hold support decently. Once plantings see a large improvement I suspect importers will back off these prices. As such, May corn holding around its 10-20 day m/a’s but much better support around the major m/a’s at $4.93-1/2-4.90-1/2 (which one could use as a likely bull defense as well). Point is I have not as yet stepped up hedge selling but it’s more a timing deal for me than pure price.
SOYBEANS:
Exports: None Visible.
Comments: Looks like a Clint Eastwood moment upon the die-hard bulls: 50+ cent decline yesterday makes for a very oversold condition; May beans nearing what has been a powerfully supportive base in the $14.60’s (already bounced overnight) that has held all of April; there are no CONFIRMATION of those tricky Brazilian bean imports, nor of more China cancellations hence…”feel lucky punk? well do you?”. In other news: No bean deliveries, 320 soyoil and 14 soymeal; Canadian Prairies sees maybe a slow start to Canola plantings; open interest fell 10,800 led by May off 3700 and July off 8500 amid moderate volume—-nice blow off of longs first time in awhile and might indicate the squeeze game has run its course. I will not recommend specific trades in here because of the large risk that needs to taken on position trades. As such, I’ll wimp out again and stick with my bearish tilt. There should be a lot more at stake on the downside…eventually.
Two coincidences: 1) implosion takes place on May Day! (bears of the world unite!) and 2) the first day of the new $1.00 daily price limit.
Lastly, some evident boundaries for the July: upside $14.74-14.83 (10/20 day), on the downside $14.36-14.29 (major m/a’s). Either side manageable risk most times but the problem is the whipsaws.
Wheat:
Exports: None Visible.
Comments: Crop tour Ks. ylds. at 7-yr. low 33.2bu./acre (yr. 38), total production 260.7mln.bu. (n/c); deliveries 143 all street; Euro futures said looking at possible damaging heat wave over the weekend; open interest fell 2300 led by July amid moderate volume. I am content to treat as a trading affair with fundamentals basically supportive on breaks due to weather and limited on the upside due to export demand. We’ll play it from there.

Kleist Comments

This is John Kleist, of Kleist Ag Consulting.
Questions? Email me: johnwkleist@sbcglobal.net

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