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Walsh Trading's Weekly Grain Report


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March 3, 2017

Fund buying and the re-inflation trade dominated this week despite prominent analysts calling for larger South American grain stocks. The trade for the most part is eschewing supply/demand fundamentals as fund managers of all asset class types continue to use dips in the grain market as buying opportunities. The buying by managed money along with trend and index following funds has occurred throughout most commodity sectors. All time highs in equities and strong rallies in metals and energies have spilled over to the grain sector. As a result rallies in corn and beans which have been deemed cheap by these funds as a potential hedge against the Dollar in this first fiscal quarter. This week’s grain trade was not without some bullish fundamental news which occurred mid-week with rumors abounding that the Trump administration was set to announce proposals that would renew the bio-diesel tax credit which would prohibit foreign imports and could boost U.S. soy oil demand by 500 million pounds. It was also rumored that the EPA would allow E-15 to be sold all year long and mandate to increase the percentage of total use longer term. If the rumors become reality, corn and soyoil markets are the most to benefit from the eventual unexpected and somewhat unforeseen increase in demand.

The bearish side of the coin for both corn and soy continue to be the impressive results from what’s being grown and coming out of the ground in South America. Brazil’s soybean harvest looks to be in the neighborhood of 107 to 109 million metric tonnes, a record crop by far while Argentinean soybean crops look to come in around 55 million metric tons. On top of that the March 31st planting intentions report looks to show soybean plantings at or near 90 million acres, also a record. I propose looking to be a seller on rallies as China remains absent on flash sale export announcements and South American weather aside from northeast Argentina looks optimal for the next ten days. Those looking for a trade idea may consider the following. Look to buy the July bean 10.00 put while selling 2 of the 12.40 calls for even money. This put/call ratio settled at positive 3 cents to end the week, so a futures rally is needed to achieve the proposed bid price of even.

Technical’s read like this for this week. For May soybeans support is down at 10.18 and with a close under 9.97 is next. Resistance is up at 10.57 and then 10.76. For May corn support comes in first at 3.70 and then 3.59. Resistance comes in at 3.89 and then 3.97. For May wheat support comes in at 4.41 and then 4.28. Resistance is up at 4.62 and then 4.72.

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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