CBOT Apl 13
Last changes
SMK 292.7 +7.6
SMN 295.2 +7.6
SMQ 296.1 +7.3
SMU 297.1 +7.3
SMV 297.7 +7.1
SMZ 299.8 +7.1
SMF7 300.1 +7
SK 955.75 +19.5
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SQ 966.25 +19.5
SU 964.75 +19
SX 966 +18.25
SF7 970 +18.25
BOK 33.96 +0.27
BON 34.24 +0.28
BOQ 34.33 +0.27
CK 373.50 +10.75
CN 377.00 +11.5
WK 461.50 +9
WN 467.50 +8.75
Soybeans continue to rock and roll to the upside, tacking on further gains and new highs this morning making this rally a no-doubter. Since moving through the 200 day moving average to the upside, funds have embraced the long side of the bean ledger with the March 31 planting report giving them the key reason to jump on the bull bandwagon. Additional news for the bean bull was released in yesterday's General Administration of Customs of China who reported that their bean imports climbed to 6.1 million tonnes, a record for March due to more attractive hog breeding margins.
US farmers were good sellers on the bean rally yesterday but the stronger Brazilian currency has shut off any selling from the Brazilian farmer. President Rousseff will meet her fate as to impeachment on April 17th when the lower house will vote on her future. And the Argentine farmer, who was expected to flood the market with beans after Macri's election, has been only a steady but lighter than expected seller to the market. Thus the bean rally remains firm without a lot of motivated sellers but viewed by chartists as a rally with legs.
Soybeans opened higher and continued to stay in steady - to -higher trade through the morning. Meal prices hit a new high in the May contract at 292.20, while bean prices struggled to get over the major benchmark at $9.50. Crush values improved further in the morning with prices trading from 63c/bu to 64c/bu. Continued wet weather in Argentina is problematic for meal shippers delaying harvest and adding to questionable quality. Meanwhile a still firmer Brazilian currency (courtesy of impeachment talks) is shutting off South American farmer selling on this bean rally. As opposed to the S. American farmer, the US farmer continues to sell both old and new crop. May soyoil values remained steady but started to trade lower on the day as traders continue to unwind previous buy soyoil / sell meal trade. Oilshare continued to lose more than 2% trading again to a corrective setback that took July down to 36.60%.
GRAINS
In the meantime the new shorts added to corn last week are underwater once again (they sold the market heavily after the March 31 report) as grains follow the soy complex rally though grudgingly so. Would have to say that the corn market now has some weather premium built into it, though the concern is still situated in Brazil where hot and dry conditions persist while the Safrina crop pollinates. Too wet concerns still exist in Argentina.
The corn market opened higher and triggered buy-stops when prices traded over key resistance at $3.71. The rally probably stemmed from recent shorts once again having to get out of the market to be told by open interest changes if they decrease tomorrow. For today the trade remains technical as corn prices try to stay in step with beans. Wheat prices also came back from near contract lows with the chart moving above key resistance at $4.58 which triggered more buy-stops as well. The July wheat / corn spread traded to new lows at 91c. Spreads strengthened further with July / Dec corn moving intro a 5 1/4c carry.
Fund recap
bot 5000 wheat
bot 15,000 corn
bot 7000 beans
bot 2000 meal
bot 2000 soyoil
The Dow opened 62 pts higher today and continued to maintain a bias to the upside trading over 140 pts higher. Crude oil traded to new highs at $42.42/barrel.
CLOSING COMMENTS
Fundamentally this rally has left many scratching their heads in lieu of more than ample world supply. Nothing has changed much to explain price action except perhaps money flows. Perhaps the Ag space is being viewed as a good investment space for now given the 3 year cycle down. Nonetheless the short has been squeezed in this market, and sometimes where there is smoke there is fire. Is the weather in Brazil worse than calculated and will the rains in Argentina begin to slow? Think that the market is just saying now that all the bearish factors have been noted, but suspect we are getting very close to the upper end of trading ranges with this recent rally
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