Louise Gartner: Quiet week as corn stalls
Not much excitement in the wheat complex last week. After the prior week of sharply lower prices and struggling to regain some footing, wheat spent the week trading in a narrow range, stuck between the technicals of watching the corn market chop around and the fundamentals of the winter wheat crop breaking dormancy in the southern Plains.
The price action in corn has gone stagnant, and as a result, its leadership has quietly faded as well. Wheat is left looking for direction, trying to find support despite a fundamental base that is weak when left on its own. Improving moisture conditions in the southern Pains just as the wheat needs it is bearish, and if corn isn't finding some life to lend support, the wheat market will be hard pressed to sustain rallies.
USDA issued its March supply/demand report on Friday, leaving virtually all US statistics unchanged. They made minor changes to the world numbers, increasing Indiaâ€™s production by 1.35 MMT, and lowering the EU's export projection by 1 MMT. Total world production was raised by 1 MMT and ending stocks increased by .43 MMT.
The market took the report in stride, as they were not expecting any major changes anyway. The attention is now focused on the very important plantings report on March 30. Everyone wants to know what corn acres will be, and then soybeans, spring wheat, cotton, etc. Early estimates have been all over the map, and price action has been stuck in a trading range for corn and wheat. I would expect that once the plantings report is behind us, price action will regain its energy- and the report will provide the direction.
Taking a look around the world, we've got the winter wheat crop either close to or actually breaking dormancy with most regions presently in good shape. China had very good rains/snow last week that was a huge help for their dry areas.
The concern about winter-kill from the cold has quieted considerably as there doesn't appear to be any damage done. However, because of a warm winter, wheat has greened up about a month early, so even normal frosts could still pose a problem and will be monitored closely.
The wheat areas of Ukraine and Russia experienced some warm spells throughout the winter but the freeze/thaw spells did not appear to harm the crop. India looks like it will make it through the season in good (actually, very good) shape, bringing home a bumper crop. The European Union is also breaking dormancy in mostly good conditions.
Technically, in Chicago May, look for support at the trading range low of 4.67-4.68, then the February low of 4.615, followed by the January low of 4.585. Resistance should show at last week's high of 4.83, then the naked close at 4.88, followed by the major gap resistance from 4.925-4.955.
In Kansas City May, look for support at last week's low of 4.96, followed by the swing low of 4.88, then the series of lows from 4.83-4.85. Then look for support at the major swing low of 4.755. Look for resistance at the trading range high of 5.09, then the swing high of 5.17, followed by the major swing high of 5.24.