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Walsh Trading's Weekly Grain Report


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After making a weekly low at 992.0 basis May soybean futures on Tuesday March 14th, beans have consolidated inside of Tuesday’s low as traders seemed reluctant to sell below 995.0 for the remainder of the week. 992.0 is a key support level and with a close over 980.0 is next. A close under 980.0 sets up 9.56 as the next level to the downside. Meaningful resistance sits up at 1020 which represents the 200 day moving average.

For wheat we are seeing signs of a near term potential bottom in both the spring wheat contracts and hard red winter Kansas City contract. Minneapolis traded spring wheat’s performance as of late may offer clues of an impending rally. The contract added 3% in over the previous three sessions, while jumping back above its 100-day and 200-day moving averages. After a poor start to March, the premium of Minneapolis futures over Chicago soft red winter ones, May basis, soared 25% from March 8 to this week’s close. This spread chart too has broken above a series of moving averages, including the 100-day and 50-day lines.

U.S. spring wheat along with hard red winter wheat is facing weather issues. Much talk of late has been on the frost in some more eastern US areas earlier this week, which may have burnt some winter wheat crops, which are more vulnerable now they are emerging from dormancy. There is the southern Plains dryness, with 74% of Oklahoma in drought, and 39% of Kansas, the top wheat-producing state. Sure, rains are in the forecast for next week, but how much, and for where? European models do have a storm system in for U.S. hard red winter wheat regions mid next week, but say the western parts are likely to not receive any significant rain, In the meantime, "higher temperatures are likely for hard red winter wheat regions over the coming weekend. The heat and dryness will exacerbate existing crop stress in the region." Meanwhile, more immediate spring wheat supplies are being squeezed by a "lack of producer selling", which has supported a "steady to firmer" cash market. US stocks of spring wheat, offering higher protein levels, are forecast by the U.S. Department of Agriculture dropping 28% this season, to 197 million bushels. If we receive a higher opening Sunday night in grains you may consider this trade. Buy 1 July KC Wheat 5.00 call and sell 2 July 420 puts for 3 cents or better. Risk the trade to negative 8 cents.

Technical’s read like this for this week. For May soybeans support is down at 9.92 and with a close under 9.82 is next. Resistance is up at 10.10 and then 10.19. For May corn support comes in first at 3.62 and then 3.57. Resistance comes in at 3.70 and then 3.73. For May wheat support comes in at 4.29 and then 4.22. Resistance is up at 4.43 and then 4.49.

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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