Rose on Grain – CME Grains Take a Breather

March 20, 2022 10:02 pm
Published by

Louis W. Rose IV

Corn:

CME May corn futures gave up 20¾ cents last week to finish at 741¾.  Last weekend, our proprietary models predicted a finish on the week that would be higher Vs the previous week, which proved to be incorrect.

The corn market finished modestly lower on weakening US export data and strengthening US currency.  The war in Ukraine likely provided strong market support.

Domestically, trader attentions remain split between 2022 acreage, domestic offtake and strong export demand, and the military conflict in Ukraine.  Planting has commenced across the mid- and southern Mississippi River Delta, with stands in fields becoming more frequent.  Corn remains in a fierce acreage battle with soybeans for 2022 acreage, with soybeans gaining favor due to dramatically lower input costs.

Net export sales and shipments were lower Vs the previous sales period at approximately 72M and 50M bu, respectively.  Sales remained well ahead of the pace required to meet the USDA’s upwardly revised projection, while shipments missed the pace requirement.  The US is 82% committed and 45% 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 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 15 (futures only) showed that the trade held its net short position little changed Vs the previous assay period at approximately 3.8B bu; large specs also held their net long near unchanged at around 1.8B 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 remain bullish, with the market also remaining somewhat overbought.  Export data, geopolitical concerns, and forerunning of the annual Planting Intentions Report seem likely to be major market moving factors for corn, wheat, and beans over the near-term.

Soybeans:

CME May soybeans lost 8 cents last week to finish at 1668.  All CME soybean contracts have commenced the new week near unchanged.  Last weekend, our proprietary models predicted a finish on the week that would be higher Vs the previous week, which proved to be incorrect.

CME soybeans finished slightly lower in sympathy with other grains - and for much the same reasons noted for corn. 

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.

Net export sales and shipments were lower Vs the previous assay period at approximately 46M and 26M bu, respectively.  Sales and shipments were again well ahead of the pace required to meet the USDA’s upwardly revised projection.  The US is 94% committed and 74% 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 15 (futures only) showed that the trade held its aggregate net short position near unchanged Vs the previous assay period at approximately 1.6B bu; large specs also held their net long near unchanged at around 810M bu.

For this week, the weekly technical analysis for and money flow into the May contract remain bullish, with the market remaining in overbought territory.

CME Wheat:

CME SRW Mar futures lost 42¾ cents last week at 1063¾.  Last weekend, our proprietary models predicted a finish on the week that would be higher Vs the previous week, which proved to be incorrect.

CME wheat finished lower in sympathy with other grains - and for much the same reasons noted above.  It seems that recent short covering, combined with increased margin requirements, drove the market to record highs a couple of weeks ago.

Domestically, dryness across much of the Great Plains continues to cause concern for 2022 production 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 5M and 9M bu, respectively.  Both sales and shipments off the average weekly pace required to meet the USDA’s official target.  The US is 86% committed and 68% 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 notably at more than 3M bu.

Internationally, despite retracement, 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 15 (futures only) showed that the trade reduced its aggregate net short position to approximately 455M bu while large specs increased their aggregate net long to around 125M bu.

For this week, the weekly technical analysis for and money flow into the May contract have turned bearish, with the market approaching oversold.

Have a great week!

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    This post was written by Louis Rose