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Market eyes USDA acreage data-Tim Hannagan
Thursday's weekly export sales report put wheat exports at 661,000 metric tons. Not a bad number, but we're sitting with 839 million bushels left over from last year's crop, as well as ample world supplies, leaving the sales looked at as not good enough. Not only is the U.S. winter wheat harvest progressing, it's starting in Europe. Nothing suggests that importers are building reserves, but just meeting near-term needs.
Corn exports were 410,000 metric tons, up 39% from the week prior, but well under the 1 million metric tons needed to be price bullish. Asian business which accounts for 70% of our exportable feed grain exports saw 267,000 metric tons sold into Asia versus 220,000 the week prior. Increases came from Japan rebuilding after the earthquake disaster.
Soybeans saw minus 32,000 metric tons after cancellations of previous sales offset new ones. US export companies announced that previous shipments of old crop of 452,000 metric tons for old crop year shipment before September 1, 2011 were canceled 301,000 metric tons were moved to new crop year. We continue to see the switching of demand exports from old crop year to new crop year. This looks to further cut new crop year 2012 ending stocks and set up a bullish mindset for a demand surge at harvest time.
This year's harvest of corn and beans should be very interesting as feeders, ethanol producers and exporters fight for their share of inventory, as 2012 ending stocks are projected dangerously low.
In last Friday's report we noted large trading funds won't begin to get position for buying long into the big June 30 planted acreage report until 3 to 5 days prior. This leaves grains subject to outside market influence and that's mostly bearish, along with Tuesday's big gains.
Thursday saw a big price break on the opening, after another earthquake in northern Japan threatening grain imports to the region. We have enjoyed an increase in demand of grains to Japan recently, as they resume normal import patterns after their first major quake. Before the opening, our government announced oil to be released from our reserves pushing crude oil down over five dollars pulling down ethanol, corn and all other markets. As a result, the funds sold everything on their books and then bought it back before the close.
Though outside markets will continue to be part of grains every day influence, they finally will have thoughts of their own come the new week on what the final planted acreage numbers will be on next Thursday's acreage report. Pre-report trade estimates from the brokerage industry come out Monday. We will look at the acreage or average guesses to shed light as to how the money will be positioned into the report.
The fear will be corn, beans and spring wheat acres will come in lower from the unusually wet spring that may have led to fewer acres planted as normal planting dates past and of course losses from flooding. This should have shorts by out and speculators buying long.
Talk of relentless rains in number one and two durum wheat producers North Carolina and Montana will lead to the lowest planted acres in 55 years, with roughly half the acres planted. It's our smallest wheat variety planted but critical to Miller's because it's used to make pasta. With record beef and pork prices consumers have been relying heavily on pasta dishes to stretch that food budget.
It all adds up to the fear prior Thursday's big report. The heat dome still looks to enter the Midwest by June 30 in the Western Corn Belt and July 2 in Illinois and into the eastern Corn Belt. But, the heat is expected to back off by July 4. So, a short blast of 95 to 105° across the grain belt to dry things up and not long enough to damage crops.
The 11 to 15 day Outlook continues hot and dry from South Dakota South to Texas. The Midwest generally looks warmer and drier than recent months.
Again, after the June 30 report, weather and its impact on yields become 90% of the pricing of futures.
Technicals read like this. December corn support lies at 6.34 then 6.16. Key resistance is 6.74 Monday and 6.70 Tuesday. If not broken then report day resistance is 6.64. November beans support is 12.95. If broken 12.40 is next. Resistance is 13.40 Monday and Tuesday and report day Thursday 13.30 if not taken out prior. July wheat support is 6.00 with minor resistance at 6.60 and major resistance at 7.10 Monday and 7.00 Wednesday.
Tim Hannagan, senior grain analyst for PFGBest.com, is a weekly contributor for Agriculture.com.