Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
NEAR-TERM MARKET FUNDAMENTALS: A number of markets have hit the pause button this morning after yesterday’s sharp gains in equities and crude oil. Farmer selling emerged on the rally that came early in the day yesterday in soybeans and corn. This suggests that farmers will increase selling on a rally despite increased talk of inflation. Traders’ attention may be focused more on the farm strike in Argentina for the remainder of the week along with the upcoming acreage report on March 31st, barring another major stimulus announcement from the Fed or US Treasury. The USDA will also issue its Quarterly Grain Stocks report on March 31st, which is next Tuesday. The new crop soybean/corn ratio has rallied over the past ten days to back over 2-to-1 and that favors soybean acreage which a number of private analysts already have at well over 80 million acres. One trader said that the relative gains by soybeans over corn in recent sessions may be due primarily to the farm strike in Argentina. Wet fields in the Midwest and the prospect of more rain into mid week are starting to delay early field work. This could eventually reduce corn acreage and add to soybean acreage in areas where fall fieldwork has not been done and the soil is especially wet. Private crop forecasters in Brazil say that harvest is ahead of the average pace despite rains in northern growing areas over the past month. However, farmer selling is thought to be slower than normal. Meanwhile, the strike continues in Argentina, shutting off farmer selling in grains and livestock. This week’s export inspections were 20.5 million bushels in soybeans, down from 23.8 million last week. Total inspections to-date stand at 75.8% of the projected total compared to a 5-year average of 76.3%. Inspections need to average 12 million each week to reach the projection.
CASH NEWS AND TENDERS: The USDA announced a sale of 20,000 tonnes of soy oil to an unknown destination yesterday.
WEATHER: Scattered showers and thunderstorms continue in Mato Grosso in Brazil with lesser amounts in Parana. Rio Grande do Sul in the south is still mostly dry. Argentina remains mostly dry. Heavy rains are expected in parts of the Midwest today and tomorrow.
TODAY’S GUIDANCE: Outside markets took a pause overnight as financial and commodity markets try to adjust to the big rally in equities and the inflationary factor. Political turmoil in Argentina is supporting soybeans in general and the more nearby contracts in particular. Volatile 2-sided action in the meal/oil spread over the past week is adding to the upside potential since those two markets have been trading upside leadership in the process. Look for the March rally to continue. Close-in support is at 952 this morning in the May contract, but better support is at 940 1/2. Today’s resistance could be as low as 971, but better resistance is near 1001. Our near term objective is still at 1010.
TODAY’S MARKET IDEAS: Look for the rally to continue in soybeans meal and oil with leadership possibly shifting back to oil among the products.
