Rose on Grain – CME Grains Finish Week Lower

April 5, 2022 2:55 pm
Published by

Louis W. Rose IV

Corn:

CME May corn futures gave up 19 cents last week to finish at 735.  We did not recommend trading any bias last week for corn, wheat, or beans due to the annual release of the USDA’s Planting Intentions Report.  CME corn has commenced the new week higher.

The corn market finished lower on weakening US export data and a modest yearly increase in domestic grain stocks, which likely led to some spec liquidation/profit-taking.  A lower-than-expected planted area projection for the US (89.5M acres) likely provided some market support.

Domestically, sowing across the Deep South continues and will begin across the remainder of the southern states as weather permits.

Net export sales were lower while shipments were higher Vs the previous sales period at approximately 25M and 74M bu, respectively.  Sales and shipments were ahead of the pace required to meet the USDA’s projection.  The US is 84% committed and 51% shipped Vs the USDA’s target.  Sales are well ahead the average expected pace for this point of the season; shipments are modestly off their expected pace.

Internationally, the war in Ukraine continues to support the corn (and wheat) market, with some now expecting that a significant amount of planned area committed to the crop will not be planted.  Private estimates of this season’s South American crop continue to move lower.

CFTC Commitments of Traders data for the week Mar 22 (futures only) showed that the trade trimmed its net short position little changed Vs the previous assay period at approximately 3.73B bu; large specs also trimmed their net long to around 1.7B bu.  

For an in-depth analysis of CFTC data see our weekly COT analysis and commentary.

For this week, the weekly technical analysis for and money flow into the May contract are supportive.  Weekly USDA export data, the April WASDE Report, weather reports, geopolitical events, and index fund rolling are major factors for this week.

Soybeans:

CME May soybeans lost 127½ cents last week to finish at 1582¾.  CME soybeans have commenced the new week higher. 

CME soybeans finished lower in sympathy with other grains and on a 91M acre US planted area projection and a significant yearly increase in quarterly stocks.

Domestically, as with corn, current prices keep beans competitive with cotton for southern acreage.  Continued strength in both cotton and corn seems likely to be supportive for CME soybeans over the near-term.  Sowing will get started across the Deep South as weather permits.

Net export sales and shipments were higher Vs the previous assay period at approximately 48M and 25M bu, respectively.  Sales and shipments were well ahead of the pace required to meet the USDA’s projection.  The US is 97% committed and 77% shipped Vs the USDA’s target.  Sales are notably ahead the average expected pace for this point of the season; shipments are on par with the expected pace.

Internationally, private estimates from across South America continue to show an expectation for a smaller than originally expected crop. 

CFTC Commitments of Traders data for the week ending Mar 22 (futures only) showed that the trade trimmed its aggregate net short position Vs the previous assay period to approximately 1.54B bu while large specs reduced their net long to around 755M bu.

For this week, the weekly technical analysis for and money flow into the May contract remain bullish, with the market no longer overbought.

CME Wheat:

CME SRW Mar futures lost 117¾ cents last week at 984½.  CME wheat has commenced the new week higher. 

CME wheat finished lower in sympathy with other grains and on noticeable weakening of foreign demand for US wheat.

Domestically, dryness across much of the Great Plains has seriously reduced 2022 production potential and much of this season’s crop across the region will likely be abandoned.  There is no relief in sight from the drought within the near- to medium-term weather forecasts.

Net export sales and shipments were lower Vs the previous assay period at approximately 3M and 13M bu, respectively.  Both sales and shipments were off the average weekly pace required to meet the USDA’s official target.  The US is 87% committed and 71% shipped Vs the USDA’s target.  Sales are modestly ahead of the average long-term pace for this point of the season while shipments are significantly off their expected pace.  SRW sales were weak at around 100K bu.

Internationally, the war in Ukraine continues to remind all market participants of just how integral the Black Sea region is to world wheat use.

CFTC Commitments of Traders data for the week ending Mar 22 (futures only) showed that the trade trimmed its aggregate net short position to approximately 448M bu while large specs reduced their aggregate net long to around 98M bu.

For this week, the weekly technical analysis for and money flow into the May contract are supportive.  

Have a great week!

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    This post was written by Louis Rose