USDA Friday
Wheat – March Wheat futures are limit up this morning, bolstered by strength in the Minneapolis contract and expectations that the USDA will slash the ending stocks figure. U.S. Wheat carryout was forecast at 292 million bushels in January, but consensus estimates are looking for this number to be trimmed to 274 million bushels. Importers have been scrambling to get their hands on supply despite record high prices, which has eaten into already tight inventories. Export sales data did show Wheat exports at 11.5 million bushels, down 39 percent from the week before and 18 percent below the 4-week average, but exports are still well ahead of the USDA's expectations for this marketing year. Wheat will likely find strong buying pressure unless the USDA raises the carryout figure, but the chances of that are slim to none. The fundamental buying in March Wheat has been so strong over the past few sessions that you can pretty much throw out the technicals until the chart shows some sort of reversal pattern. The RSI is giving an overbought reading of 80 percent on the 9-day and 74 percent on the 14-day, indicating that the market has room to run before it reaches extremely overbought levels in the lower 90's.
Soybeans – March Beans closed electronic trading 29 ½ cents higher on expectations that the USDA will cut the ending stocks figure. January's report pegged ending stocks at 175 million bushels, which is expected to fall to 167 million bushels in today's report. Stocks are already much lower than last year's 574 million bushel figure due to strong export demand for Soybean Crush. Export sales for Beans were especially strong at 38.1 million bushels, easily surpassing the high side of estimates at 33 million bushels. The export number is 86 percent higher than the 4-week average and more than double the prior week's figure. March Beans appear to be breaking out above the recent consolidation resistance area near 1330. A close above 1341.50 would be considered a breakout, but a close above contract highs of 1373 would be more encouraging. Momentum has moved sharply higher and is outpacing the RSI indicator, which comes in overbought at 77 percent. Support comes in at 1310, 1288.75 and 1276.50, while resistance can be found at 1343.75, 1355.75 and 1377.25.
Corn – March Corn finished 7 ½ cents high in the overnight session on expectations that the USDA will lower ending stocks. The average estimate forecasts the ending stocks figure to be 1.411 billion bushels, down from 1.438 billion bushels in the January report, but still up from last year's ending stocks figure of 1.304 billion bushels. The Corn market has been overshadowed by the Soybean and Wheat markets, which could result in lower acreage for the 2008-09 crop year. Export sales for the feed grain were disappointing, coming in at 40.5 million bushels, a figure that was within the range of estimates, but still 46 percent lower than the prior week and 36 percent below the 4-week average. Demand may increase for sweetener use due to climbing sugar prices in recent weeks, but further strengthening in the greenback may act to offset this. March Corn remains the most technically vulnerable of the grains, needing to break out above the 515 mark to renew enthusiasm. Support comes in at 492, 484.75 and 478.50, while resistance can be found at 505.75, 512 and 519.25.
Rob Kurzatkowski, Commodity Analyst
