Market Wrap-Up
by Chris L. Haverkamp
| Date: 03/09/10 | Estimated Update: 03/10/10 |
|---|---|
| Company: | Paragon Investments, Inc. |
| Phone: | 888-452-8751 |
| E-Mail: | info@pitrader.com |
| Website: | www.ParagonInvestments.com |
Corn Futures
Fundamental: May corn started the day higher and quickly pushed to lower on the day, taking out Friday's lows in the process. However, the May contract recovered to marginally higher levels by late morning and remained mostly on the plus side into the close. Traders said that news was on the light side today and that corn responded to 2-sided trade by funds and fluctuations in the dollar for much of the day's price direction. Spreaders versus wheat and soybeans were also credited being minor factors in the corn market over the course of the day. This week's export inspections were in line with trade expectations at 34.077 million bushels. Cumulative export inspections stand at 42.1% of the USDA's export projection for 2009/10 versus a 5-year average of 49.1%. Inspections need to average 44.8 million bushels each week to reach the USDA's projection. Rain is expected across most of the Midwest this week with the heaviest amounts across the southern tier and also across the Deep South.
Technical: May corn was slightly lower, continuing Friday's defensive tone. The session lows found support at 372, which is the uptrend line drawn off the February swing lows. Resistance was the 20-day moving average of 377.6. Directionals are trending lower to favor the sell side. Elliott wave watchers are looking for another leg down, with downside objectives mostly between 340 and 320.
Soybean Futures
Fundamental: The soybean complex started the week on a positive note with all three markets trading mostly higher throughout the day. This came on a light news day with market activity also on the light side. Soybean traders indicated that some support came from buying by spreaders versus corn along with a generally lower dollar. However, export inspections were below trade expectations for soybeans at just 30.9 million bushels. Cumulative inspections stand at 81.3% of the USDA's export projection for 2009/10 versus a 5- year average of 69.1%. Still, inspections need to average just 10.1 million bushels each week to reach the USDA's projection. Argentina and Brazil are experiencing mostly dry conditions with scattered rains forecast into this week in southern growing areas of Argentina and in northern growing areas of Brazil. The rains in Brazil are expected to be light enough to cause only minimal harvest delays with about 1/3rd of the crop there already harvested.
Technical: May soybeans were higher on Monday, but still consolidating mostly below the 950 level. The close was still above the 940 level to support the idea of a consolidation range between 940 and 975. Directionals show slight downtrends that favor the sell side. Elliott Wave watchers are looking for another leg down, with downside objectives below 880.
Wheat Futures
Fundamental: May wheat chopped on the plus side in a narrow range overnight and then started the day session well above the overnight highs. However, the higher price level attracted a burst of selling which quickly pushed the market below the overnight lows. Prices then traded within the early range for the remainder of the day session in the May contract. This week's export inspections in wheat were 20.4 million bushels which was above the high end of the range of trade expectations. Cumulative inspections stand at 77.7% of the USDA's projection for the 2009/10 marketing year versus a 5-year average of 76.3%. The current inspection total finally pulled ahead of the 5-year average on last week's report after lagging the 5-year average for much of the marketing year. Inspections need to average 14.5 million bushels each week to reach the USDA's projection. Traders said that volume was thin to start the day with some traders already waiting for direction from Wednesday's supply and demand report from the USDA. Wheat gained marginally on corn in the early going in light activity by spreaders. Rain is expected across most of the soft red winter wheat belt over the course of this week. The heaviest amounts are expected across the southern and western portions of the soft red belt with some heavy amounts also possible in the east central Plains.
Technical: May wheat was slightly higher, seeing an inside day of Friday's big down day. The action looks like consolidation at the bottom of the sideways pattern seen for the last month. Resistance is the recent highs, which disliked being above 520. Support has been the recent lows of 492. Today's close was below 500 for a second straight session and may attract selling. Directionals show a slight downtrend to favor the sell side. Elliott wave watchers are looking for another leg down, with downside objectives around 450 or lower.
Livestock
Live cattle futures were higher on Monday. April closed strong with a triple-digit gain, not succumbing to pressure from the Goldman roll. Fund buying was a noted feature. The other contracts followed suit, seeing gains of about 50-75 points. Since the fundamental facts talked about in the midsession comments, estimates of this week's showlists were net higher, pegging Nebraska higher and only partially offset by lower numbers in the Southern Plains. Bids and asking prices haven't even developed as each side jockeys for the negotiating upper hand. Cattle slaughter for today was pegged a 120,000 head, which was little different and right in the middle of last week's and last year's numbers. The gains registered new highs for the move, with some contract highs, to continue the uptrend. The buying has continued despite the overbought condition and today despite the weaker outside markets (i.e. lower Dow Jones, higher dollar, and lower corn). With the new highs, some consolidation seems likely ahead of Wednesday's USDA reports and as traders await this week's cash cattle trade.
Feeder cattle futures were higher. The gains had backed down from the triple-digit gains seen at midsession, but on the charts the higher action was still impressive (i.e. higher highs, higher closes, and new contract highs). There isn't anything new to talk about. Cash reports are still showing some markets higher, but some were lower as well prompting concerns about the futures premium and overbought condition. Consolidation and a correction seems likely again as April futures has but on about $5 in the March rally.
Lean hog futures were slightly lower on Monday, seeing losses of 15-42 points for the front five contracts. The lower action looks like a minor correction within the steep uptrend channel. The selling is easy to understand given the futures premiums and overbought condition. Cash fundamentals had a little bit of something for everybody. Cash hog prices were steady to higher, but the pork market was at a standstill, looking like some reluctance to the higher prices. Hog slaughter was slightly lower than last year, but down noticeably from last week. The Tyson Logansport, IN plant is out of operation as it recovers from last week's fire. Reports are that it may not restart until later this week or early next week. This is prompting talk of reduced packer demand amid the reduced slaughter capacity. Others think that some plants may step up the pace to take advantage of the situation. Consolidation was expected as futures wait for cash to catch up (which may not occur), and that thinking hasn't changed.
Milk futures finished weak, seeing double digit losses for the second quarter contracts. April was the downside leader, finding a new low for the move amid continued weakness in the cheese market. May was lower as well, but continued to find support at previous lows (i.e. 13.00). There is little to get excited about amid the weak cash fundamentals of the spring flush.
