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Walsh Trading's Weekly Grain Report


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The first WASDE report given by the USDA for 2017 this year offered a few surprises especially in the soy complex. The USDA reports were considered bullish versus trade expectations as ending stocks for soybeans came in near 420 million bushels versus an average trade estimate of 468. Final production in the U.S. came in at 4.307 billion bushels, which was 67 million bushels versus trade expectations but still a record. Final yield was reduced down from 52.5 versus 52.1 bushels per acre. In short, final production and yield are still at all-time records, while ending stocks at 420 million bushels are significantly higher than last year’s 197. The government raised Brazilian production estimates to 104 million metric tons versus last month’s 102.4, while keeping Argentina’s the same at 57.0 million metric tons. The numbers on final U.S. production and ending stocks were the report day highlights catching those bearish into the report for which there were many on the wrong side of the market. Those who bet wrong either exited immediately following the report or at the closer of trading. Regardless beans traded 25 cents higher on report day (1/12), while trading as much as 12 cents higher on Friday January 13th before profit taking set in to close the week below key trend line resistance at 10.54 basis March futures. There was a flash sale announced from the USDA on Friday as well. The announcement showed 132K metric tons of beans were sold to an “unknown destination”. Unknown is spelled C-H-I-N-A. This is their first purchase since before Christmas and reignited buying interest by trend and index following funds to end the week. Going forward there is major concern throughout the trade concerning Argentina’s soybean crop. Growing areas in the northern and eastern sections of the country have been deluged by rain in the last month while more is on the way that has already flooded and drowned out fields. Southern Argentina meanwhile is experiencing a prolonged drought. While estimates came in unchanged from the month prior on Argentinean bean production, some private analysts have lowered production by 5 to 6 million metric tons due to the weather issues. While Brazil could easily make up for most of the shortfall, as its growing season weather has been for the most part optimal so far, the market will always trade fear before fact. Bullish weather news from the world’s number one bean crusher coupled with the fact that the Chinese are back in buying U.S. beans, the past of least resistance remains upward in the near term in the soy complex in my view.

Technical’s read like this for this week. For March soybeans support is down at 10.09 and with a close under 9.71 is next. Resistance is up at 10.69 and then 10.91. For March corn support comes in first at 3.53 and then 3.48. Resistance comes in at 3.62 and then 3.66. For March wheat support comes in at 4.16 and then 4.05 Resistance is up at 4.34 and then 4.41.

For those interested I hold a weekly grain webinar each Thursday at 3pm. It is free for anyone who wants to sign up and link for sign up is below. If you cannot attend live a recording will be sent to your email upon signup.

Sign Up Now

For more info on Walsh Trading’s Absolute Ag Performance CTA please click on the link below:

http://christianawalsh.wix.com/bnc--cl-lusk

Sean Lusk

Director Commercial Hedging Division

Walsh Trading

312 957 8103

888 391 7894 toll free

312 256 0109 fax

slusk@walshtrading.com

www.walshtrading.com

Walsh Trading

53 W Jackson Suite 750

Chicago, Il 60604



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About the author


Sean Lusk is a registered commodity broker and Director of the Commercial Hedging Division of Walsh Trading in Chicago. Sean began in the business as a runner on the trading floor during summer breaks from college in 1993. Upon his graduation from Southern Illinois University at Carbondale in 1996, Sean began his career on the trading floor of the Chicago Mercantile Exchange (CME). Overseeing billions of dollars of transactions working as a clerk in the Eurodollar pit, Sean took the next step and became a floor broker and member of the CME in 2003. He handled customer orders for banks and investment houses from all over the world from inside the Libor pit at the CME.

Now, at Walsh Trading, Sean utilizes his experience in the marketplace and his professional client service skills to aid and assist customers in their trading endeavors.  

He writes daily and weekly commentaries focusing on both the Precious Metals and Agricultural Markets along with related market activity.

Sean has been quoted in various media outlets discussing futures markets. 

These include:

 

  • Futures Magazine
  • Reuters
  • Forbes
  • Kitco
  • Nikkei Press
  • CCTV.com

 

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