Grain Bull Rally Holding
The grain bull market is alive and well, with grains holding near recent highs as we move into the March 31 acreage intentions and stocks reports.
So far the spring has turned out to be another nonevent across the Midwest, with another cool start to spring, which is delaying fieldwork and the warmup of soils across the U.S. Winter wheat regions remain dry with freeze damage showing up in winter wheat as it comes out of dormancy. Overall, the winter wheat crop remains in horrible shape as it comes out of dormancy with little rain across the HRW Wheat Belt this spring so far. Little rain is forecast for this area in the coming two-week forecast, either. And the forecast continues to call for cold conditions across the U.S. - leaving us with another late spring. It's "deja vu all over again" as Yogi Berra famously said, with this spring so far a repeat of last spring's terrible start (cold and wet).
The weather is turning a bit wetter in today's forecast, especially the next week in the northern Plains and Lakes states the coming week. It also remains cool for the entire U.S., which will delay warmup and spring planting across the U.S. The eight- to 14-day forecast is also wet for the eastern Corn Belt - more planting delays!
SAM weather is calling for even wetter conditions across the growing region for the next week than yesterday's forecast, and that is slightly supportive to the grain markets. Overall, South America continues to struggle with harvest.
On the bearish side, it's quiet in Ukraine overnight, with Russian forces still concentrated on the Ukrainian border. But so far, the Russians have no reason to go into any other provinces of Ukraine as unrest seems under control for now. But tensions remain high in this region after Russia annexed the Crimea, and so far very few shots have been fired as Russians take control of the Crimean military bases and locations. That is encouraging that war hasn't broken out between these two countries. We note that Putin's popularity has soared in Russia as he has taken control of Crimea, so this so far has been a very popular thing in Russia.
Some potential targets for advancing sales are $14.50 to $15 mark for soybeans, $5.40 nearby corn futures, and $7.50 CBOT wheat futures. For new-crop markets, $4.97 December corn and $12.06 November soybeans are some targets that would be sales opportunities. Since the market is near the old highs, it appears these targets are still achievable as trend remains up.
As we've stated before in the past few months, Pro Ag has been looking for a rally from January of this year into spring, and we have actually had a little stronger rally than we expected into March. Let's hope this rally can continue, but the outlook for new-crop harvest prices is not good compared to current price offerings. It's likely once this spring rally is over, we will need to be aggressive sellers of grains of all kinds (wheat, corn, and soybeans) to end up with some profit in 2014.