PFGBEST Futures Training Division

Grain Analysis(6)

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Tuesday, April 24:

SPREADING………. Last week’s weekly export inspection report on Monday showed 42 million bushels of corn was asked by a US exporter to be inspected by the USDA to be shipped near-term. This was a huge jump from the 26 m.b. the week prior. Bean inspections dropped sharply. In my last report, last week I said this is the rumored Chinese buying surfacing as it shows China slowing its bean imports to free port access or space for corn purchases and the actual sale would surface soon from the USDA. Today a sale of 480 t.m.t. of corn was sold to a unknown destination. Traders believe unknown is spelled ‘CHINA’. Don’t expect massive old crop sales to China. Most of the purchases to come will be new crop year delivery for after September 1 but this certainly supports old crop year demand psychology. Also bean sales will continue strong as Brazil is 75% sold now leaving the US as the world’s continuous number-one port for soybeans. Crop progress reports were largely ignored as planting is just getting started. Corn seeded came in at 28% complete versus the 10 year average of 18%. At 35% we will get our first crop condition report that funds trade off of very aggressively. Beans seeded were 6% versus the 10 year average of 2%. Nothing here to trade yet. Spring wheat is 57% planted. Minnesota is 20% emerge, North Dakota 12% and Idaho 27% emerged all in very dry conditions but possibly poised for a frost early next week. The nations winter wheat crop remains robust at 63% good to excellent condition, down 1% from last week but up 5% from the first report four weeks ago and 28% better than a year ago. Soft red winter wheat in the eastern grain belt of Illinois and Indiana have the highest ratings with Texas and Colorado in the hard red winter wheat area the lowest. There’s a couple of chances for frost damage Thursday and next Monday. Wheat traders are watching closely. Last week’s lows on corn, beans and wheat should be the lows for the month as next week is May and traders will want to belong into the May 10 USDA crop report, expecting lower ending stocks. After all grains opened higher today with soybeans making new highs for the year, led to traders selling corn and wheat has a short spread hedge against long bean positions. We could see this unwind on Wednesday. Technicals read like this. July corns support is 6.06 then 5.90. Resistance 6.18 then 6.36. July bean support is 14.55 then 14.25. Resistance 14.70. July wheat is finding support at 6.30 then 6.12 with resistance 6.48 then 6.58. The 14.70 July bean resistance is last year’s August high that led to a two dollars correction. A close over and sharply higher prices will occur.

There is a substantial risk of loss in trading futures and options. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report.

Timely Correction

TIMELY CORRECTION………. Well, that was a timely price correction. As you know on my April 5 report I explain why we will get a measurable price correction off the April 10 USDA crop report, even if it’s bullish. My reasoning was funds clean out long held positions each year to some level after the report as there is not another report for a month and the negative planting progress begins. We noted corn broke $.60 and beans $.80 after last year’s report. This year corn broke $.65 and beans $.50. We had 6.00 to 6.10 on May futures as our buying objective on the break and May beans 13.90 to 14.10. Prices were hit on Wednesday. The question is, is this week’s report low the low for the month and maybe the growing season. Weather will determine that. It’s important to recognize and find a post-April report low as funds build their seasonal weather premium rally into may, June and July. Last year’s post-April report low lead to a weather premium corn rally of 1.10 and beans 1.20. Our current weather outlook by WXRISK.COM, a AG whether site, is for warmer and drier conditions across the Midwest next week and possibly through May 1. But one weather model he has suggests the opposite. Here’s the debate. Will the trade see this as bearish as planting at a record pace begins on the dryness. Or will they see the previously dryness in many Midwest areas as a problem getting worse and growers planting in dry soil and poor emergence. When we coming Monday we will look at current weather updates for any changes. Any change in weather to wetter could lead us to a lower start on the week, but drier sets up higher prices and a bullish mindset into the may 10 USDA crop report. Technicals read like this. July corns support is 5.90 resistance 6.36. July bean support is 14.20 , if broken next support is 14.00. Resistance is 14.60. July wheat support is 6.12. Resistance 6.30 then 6.48. Since may futures go into deliveries at the end of next week were moving to the July contract.

ALMOST THERE

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Tuesday, April 17:

Monday’s lower grain prices came on the back of weather reports of ample Midwest weekend rains to help emergence on early planted grain – that and a 6- to 10-day drier outlook that will get farmers off to a fast pace on planting.

Early planting progress and weather is always viewed by the trade as negative; early-in means early-out, with key yield development for corn ahead of the July heat and dryness that potentially would occurs. Note, last year, after a wet spring planting season, July brought extreme heat and dryness for late pollinating corn, which reduced yields. We had record late planting due to spring rains. They can avoid a similar problem this year if planting progresses quickly.

Monday’s weekly export inspection report, a gauge of near-term demand, showed beans to be inspected and shipped near term at 18 million bushels versus 27 last week and the 4-week average of 25. Key world player China was in for 7 m.b. versus 12 last week. Bean exports have been soaring lately has China finds coverage at U.S. ports after shortfalls in South American production this year. The bean drop in exports may come from corn interest.

Rumors circled last week of China in buying corn. Weekly inspections for corn were 42 m.b. versus 26 last week and the 4-week average of 20. It could be China adding corn to balance incoming trade as their incoming seaports have limited space.

The weekly crop progress report comes out after the close today, one day delayed. Tuesday’s gains came off the “turnaround Tuesday” effect, with the outside markets up measurably sparking short covering in grains. We expect a post-USDA crop report low to be posted before month end.

We are 80% through our projected correction off the April 10 government crop report. Though tonight’s crop progress report will show a fast planting pace, it will be under expectations on two fronts. One, the last of government crop insurance pre-planting dates occurs Saturday. After that, growers can plant at will. Two, we have three frost days this week across many areas of the Midwest — Tuesday, Thursday and Saturday. Growers will be cautious about planting until after these events.

Note that 75% of the U.S. corn crop gets planted in May as frost and freeze dates are past.

Technicals read like this. Support underpins May corn at $6.10, and resistance is $6.34 then $6.40. Support for May beans is $14.10 then $13.90, with resistance up at $14.50 then $14.70. May wheat has support at $6.14 then $5.98. Resistance is $6.32 then $6.60.

Profit Taking(2)

PROFIT TAKING………………. Well, with three government reports in the last 30 days, we now won’t have the influence of any pending USDA report until May 10 or a month away. That means that other than weather’s impact on planting progress were in a gray area where grains chew on the old news for support while planting progress weighs on strength. Once were 35 to 40% planted the crop condition report for corn and beans will come out and weather’s impact on emergence becomes 90% of our pricing influence. So how’s planting going. No beans were reported as of April, 9 but corn came in at 7% seeded versus the 10 year average of 3%. Traders had expected 15%. Reason were ahead of pace is the generally warmer and drier than normal weather across the Midwest grain belt where 85% of our corn and beans call home. The slower than expected pace is the results of the government crop insurance program that if signed up for states you can’t plant until after certain dates that vary from state to state. The states in the upper quarter like North Dakota, Minnesota, Wisconsin and Michigan plant later as frost and freeze can occur into the end of the April. States south of Illinois, Indiana and Ohio or the Southern Delta plant earliest as they are out of harms way on whether first. 90% of the state’s planting date restrictions pass by April 21, so expect a fast pace of planting after that, weather permitting. As expected states over the 7% national average are Kentucky 32%, North Carolina. 25, Tennessee 46 and Texas 52%. Furthest behind were Michigan 3%, Wisconsin zero, South Dakota two, North Dakota zero, and Minnesota 2%. Monday’s crop condition report showed an improving winter wheat crop at 61% good to excellent up 3% from the week prior and 32% over last year’s disaster. Soft red winter wheat states Illinois were 84%, Indiana 83 and Ohio. 50% good to excellent. Recent frost and freeze scares had little effect on the soft red winter wheat as it is in the greening up stage with no head or kernels to be damaged while early planted spring wheat in the upper Plains has yet to emerge. The hard red winter wheat in the Southwest saw good gains with number one wheat producers state Kansas at 65% good to excellent up 5% on the week. Oklahoma 77% up 2 and Colorado 42%, up 1. Texas at 38%, up 4%. Though Texas is dragging its feet, it’s much improved over last year’s drought. WXRISK.COM sees two rain events the next five days in those states, looking to further improve wheat ratings. With demand for wheat slow, a rally on its own has to come from a production problem here in the US, who is the world’s number-one producer exporter. At least near-term production looks on the upside on improving quality. Tuesday’s crop report was in line with expectations and no surprises. Corn ending stocks were 801 million bushels, unchanged from the month prior. Traders had expected it about 80 m.b. lower but it’s still a historically low number putting almost unrealistic growing season weather results needed to improve inventories to safe levels next year. World stocks fell to 122 m.m.t. and a stocks to use ratio the lowest since 1973. Any weather problem with the new crop and old crop demand will jump sharply as importers buy coverage as insurance. Bean carryover was put at 250 million bushels, down 25 from last month, but over pre-report estimates. This led to a higher opening but a lower close as buy the rumor, sell the fact made its play. Since South American countries tally production as harvest comes in and test weights and such are implemented and harvest continues through to months end in Argentina, Paraguay and Brazil traders will expect further cuts in the May USDA report. This past report cut 4 million metric tons in South America with overall production, down 17 million metric tons over the year prior. Wheat carryover was put at 793 m.b. down 32 from last month largely on wheat to feed usage increases. It’s simple. The break in wheat prices and corn strength has wheat at a 1.3% discount to corn versus a five-year average of a 41% premium to corn. Asian markets more concerned about quantity and value over quality are buying up all the low-quality feed wheat. Okay, turn the page. On my last report, last Thursday I gave the reason why we should expect a breaking in prices after the report. One, funds take profits after reports to pay bonuses on profits taken before a month ends. Two, looking forward, we wouldn’t have another perceived bullish crop report for a month. Three, we now face a negative mindset that comes off planting progress. Four, the last two years saw measurable breaks after the April report with last year’s corn drop over $.50 and beans $.80. As of Wednesday’s close corn broke $.34 off the Monday pre-report high, beans $.40 off its Monday high and wheat $.29 lower. We expect to find a near-term post report low before the month ends to be bought and hold long for new highs in the growing season as large trading funds will build their weather premium rally into the market. Last year corn saw a post April report low lead to a weather premium high of a 1.10 by mid-June. Beans saw a 1.20 rally. Funds have a yearly cycle, they follow. This year cycle sets up very strong due to extremely tight corn and bean ending stocks. Weekly export sales Thursday shows 959 t.m.t. of corn was sold last week up 2% from the week prior. This was better than the trade had expected as importers usually back off ahead of the USDA crop report such as this week. Mexico continues to replenish drought drained reserves with US corn at 295 t.m.t. versus 267 last week, and China 60 t.m.t. versus 394 the week prior. Bean sales were at 460 thousand metric tons, up 13% from the week prior. China was in for 134 old crop year and 170 new crop year. Also the USDA announced new sales to China that will show up on next week’s report of 630 t.m.t. old and new crop . After three down days in corn and beans Thursday rebounded with gains off the overall bullish export news and Friday we started off sharply lower. Long-term weather forecasts for the end of April early May are setting up hotter and drier conditions. So a low needs to be found near-term to buy as May should see a weather premium start to build. The post-April 10 report low will hold through August 1. Technicals read like this. Entering Friday, May corn first support is 6.26 then worst-case downside scenario 6.10. May bean support is 14.1. then 13.90.. May wheat support is 6.14 then 5.98.

HOLIDAY NOTES

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Thursday, April 5:

First note: grain markets are closed Friday and re-open Sunday at 6:00 p.m. Central time. On last Thursday’s report, I gave ideas of where the markets would go if last Friday’s planted acreage report was bullish or bearish. I said if it was in line with pre-report estimates, they would put the money back in that was taken out prior. (And I said everyone would come in Monday and say, “it’s not what you plant but what you grow.” That’s what happened.

The profits taken prior to the report were put back in Friday and Monday was back to the basic trading. The only thing that’s staying with the market from the report is a little more bullish long beans on the fewer acres planted and a little more bullish near-term corn off the lower quarterly stocks report. But the trade knows tight stocks can be offset by weaker demand when prices are high, and the trade realizes you can produce more beans than last year on less acres if weather is perfect and yields are higher. Turn the page on last week’s reports.

The funds have turned their page. Here’s at least an idea what April should bring. We should close higher Monday on fear ahead of Tuesday’s 7:30 a.m. USDA monthly crop report – fear that the USDA will lower ending stocks for corn and beans due to the lower quarterly stocks report Friday and recent cuts in corn and bean production in South America.

If that is in the report, and if it gives us price gains, expect funds fat with profits to take them; that would give us our usual post-report rally break on monthly profit-taking by funds which then pay handsome bonuses on profits taken.

Mid-April is a good time for a break in prices as planting is underway with little weather risk to the grains. But if that occurs, it will be a good buying opportunity, as funds will start buying again, too. There will be the building of a whether premium taking corn and beans to new highs in May and June until the crop production security is in.

Thursday’s weekly export sales report showed 937 thousand metric tons of corn was sold last week versus 862 the week prior. Drought-stricken Mexico was in for 267 and was a buyer for the 18th consecutive week. China was in for 394, and bought for only the second time in seven weeks. It appears that China sees it’s time to go into U.S. ports to fill the production hole left from South America.

Bean exports were 406 thousand metric tons versus 356 the week prior. China was in for 257 for current crop year delivery prior to September 1, and 525 for new crop year delivery after September 1. That’s almost 1 million metric tons. Loss of production in world number two bean producer Brazil and shrinking palm oil production has China in big time for beans to crush to get its meal for expanding hog and chicken populations and soy oil for cooking.

And a final note: after hitting the high for the year off last April’s crop report, corn then broke by 50 cents by month end, and beans went down 80 cents. Last year’s break off the report isn’t necessarily reflective of this year’s fundamentals. But it is certainly something to take note of.

Technicals read like this. May corn has support at $6.34. Resistance is $6.66. A close over and $6.84 is next. May beans are entering support zones today at $14.15 then $13.75. Resistance is $14.50. May wheat support is $6.28 then $6.14. Resistance is up at $6.64.

SHORT WEEK

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Monday, April 2:

With the markets closed Friday, all of this week’s news is concentrated into four days. With the April USDA monthly crop report due for release next Tuesday, April 10 at 7:30 a.m. (Central) there are only four days to get positioned ahead of it now.

This means even if a 3-day weekend closing just before the report encourages profit-taking, any breaks will be short-lived as traders will largely want to be long into the report on fear of ending stocks inventory coming in lower. Especially in the corn futures, after Friday’s quarterly stocks came in so low.

First things first: now that the stocks and acreage reports are behind us, exports look to pick up. Monday’s weekly export inspection report showed 15.3 million bushels of wheat was inspected for near-term export, unchanged from the week prior. No change as to stocks on hand, which are still very large, leading importers to buy hand to mouth until they get a feel for how the current winter wheat crop (now maturing) will grow.

Corn is a different story with inspections at 30.9 million bushels versus 24.7 last week. After quarterly stocks came in much lower than expected, importers see immediate corn supplies tightening – so filling needs now, at these prices, make good sense.

Beans inspected for near-term shipments were 28.8 million bushels versus 25.3 last week. China came in this morning for 120 thousand metric tons for current crop year delivery after the acreage report Friday now lends thought that ending stocks next year could be cut in half from current year levels. Importers fear if they wait to cover needs they could be paying $1 or $2 more, later.

Brazilian (the world’s #2 exporter) beans are 70% harvested. U.S. sales/shipping will be happening more in the fourth quarter. (Brazil sales should be done in May.) It makes sense for China and others to overbook U.S. beans for current crop year and new crop year season shipments after September 1 on two fronts. One, with Brazil’s drought measurably cutting their export projections, and the U.S. planting less acres this spring (not to mention unforeseen potential growing problems) current prices may end up being a real value. Two, if growing season weather in the U.S. is near-perfect through August, we may yet produce a bigger crop this year than last even on fewer acres.

Importers can then cancel previous purchases for future shipments without penalty and re-buy at lower harvest bids. As for last Friday’s crop report and its influence on futures pricing, the quarterly stocks report showed 6 billion bushels as of March 1 versus 6.523 a year ago. 523 million bushels was the decline, due to increased corn usage in ethanol production trying to keep up with rising crude oil prices and seasonal pushing usage numbers up.

Also feed usage was greater, and exports, though slightly under a year ago, are running above our 5-year average. This suggests next Tuesday’s USDA monthly crop report will adjust the already historically low ending stocks number for the 2011- 12 season that ends August 31 – it will be lowered. As per the planted acreage report, the USDA projects corn acres at 95.9 million acres, up 4 million from last year. With normal yields from good growing season weather, we can increase next years ending stocks up, to approximately 1.1 to 1.3 billion bushels.

Enough to say we won’t run out but still historically low. December new crop futures will reluctantly drag its feet up with old crop May and July futures as the tail of the dog until it builds a weather premium in. That would be a higher price that reflects potential crop problems if weather is not optimal.

“It’s not what you plant but what you grow.”

Friday’s report for beans was all about the planted acreage number at 73.9 million acres to be seeded this spring. That’s the lowest in five years and lends to talk that ending stocks inventories for the 2012-2013 marketing year could be cut in half. That essentially indicates we are under value and prices need to move higher to ration the crop.

Rationing can come on two fronts. One, prices go high enough to abate demand. Two, prices have to move high enough to see acres previously planned for corn go to beans. Either way, we’re going to see $15+ beans, once the next phase of the bull market enters, and that’s building a weather premium.

Technicals read like this. May corn support lies at $6.34 with resistance at $6.66 then $6.84. May bean support is $14.10 with resistance $14.50. Note, a close under $14.10 and $13.60 is next. May wheat support is $6.38 with resistance at $6.66. A close over $6.66 sets up $6.90 as the next stop.

Profit Taking

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Monday, April 13:

Grains Analysis 3/29/2012

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Thursday, March 29:

GET READY

Thursday’s weekly export sales report was a typical one, prior to a major crop report such as Friday’s planted acreage and quarterly stocks report. It came in with low exports.

Importing countries back away and await acreage numbers and their future production to determine whether they should be patient on purchases or accelerate them. Wheat exports were 226 thousand metric tons, down 58% from the week prior. Of course, with over 800 million bushels of ending stocks inventory, nearly double what would be considered tight stocks, demand remains a non-price-driving force. Supply-side fundamentals will drive the price up, if anything. That could be next week.

WXRISK.com the weather site sees a potential for a frost or freeze across the Midwest late next week. This could cause crop damage, especially in Kansas, the number one winter wheat producing state. There, the crop is further along due to a early start to spring. A close over $6.60 in May futures would be a major bull breakout that would force trend-following funds to aggressively buy back much of the 81,000 short positions they have.

Corn exports were a low for the year at 130 thousand metric tons. No surprise – last week’s price hit the high of the year and we have a big crop report in front of us.

Bean exports came in at 471 thousand metric tons, up 32% for the week, largely on continued Chinese demand, but we were under the 4-week average of 632.

All of this means little, now, as the trade gets ready for Friday’s 7:30 a.m. Central time quarterly stocks and planted acreage report. Quarterly stocks are the amount of each grain on hand as of March 1. This figure – whether up or down – will lead to an adjustment for current crop year ending stocks inventory numbers.

It will also affect pricing on old crop futures for May, July, August and September futures contracts. The planted acreage report gives us the acres to be planted on the corn, beans and spring wheat and affects pricing of the new crop contracts, which are December corn and November beans on out.

One thing is certain, there is high risk on a report day when two major reports collide. One could be bullish and one bearish, both bullish or bearish, or any combination. Certainly low-margin accounts will stand aside. Corn is trading almost identical to last year. March this year gave us a 50-cent rally. Last year corn rallied $1.17 in the week prior the report. This week we saw a 45-cent break, and last year we broke 57 cents. Last year, we closed limit up (30 cents) the day of the report and were $1.06 higher over three days. Needless to say, if Fridays report shows less acreage than expected, we will put the lost 45 cents right back on.

Last year we planted more corn and less beans but the corn acres were perceived not enough to keep up with the demand. On corn, a more bearish report than expected would pressure May futures to $5.84. If it’s more bullish than anticipated, corn moves back up to $6.66. May beans could see $12.90 on a bearish report or a push to $14.50 basis May futures on the upside.

My next report will be Tuesday. If you want to listen to my grain Web talk each Wednesday at 2:00 p.m. Central, just call for a password: (800) 542-1022.

A LOT OUT THERE

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Tuesday, March 27:

Monday’s weekly export inspections report, a gauge of near-term demand, was weak as expected ahead of Friday’s big USDA planted acreage report. Importing countries back away from the market until the new acreage and potential production numbers unveil themselves.

Wheat inspected for near-term shipment was 15.3 million bushels versus 21 the week prior and four-week average of 19. Corn was 22.2 million bushels versus 23.2 last week, and the four-week average of 29; beans were 24.9 versus a four-week average of 29. Monday saw grains bought across the board on fear that Friday’s crop report won’t unveil enough acres seeded this spring to offset the strong world demand depleting our reserves through exports. But at late midsession Monday, traders sold corn and pulled it down while holding long beans as traders are more bullish beans longer term than corn.

Look for them to unwind that spread ahead of Friday’s report as well. Spread trading is expected to be big this week on several fronts.

One, the planted acreage report affects new crop December corn futures and new crop November beans and our 2013 ending stocks inventory from its eventual production. Old crop futures would be more influenced by Friday’s quarterly stocks if it has more affect concerning current crop year inventory for corn and beans that ends August 31.

We also expect a lot of old and new crop spreading between July and December corn and July vs. November beans. All this should continue to give us wild swings in the grains prior the report as traders move in and out of trades. The pre-report estimates came out from 30 major brokerage houses polled. The average corn acre guess is 94.6 million acres to be planted versus 91.9 last year and a range of 93.7 to 95.7. Beans were 75.4 versus 74.9 last year with a range of 74.4 to 76.6. All wheat 57.5 versus 54.4 last year and a range of 56 to 58.3 million acres.

Of course, come Monday, traders will say it’s not what you plant but what you grow, as weather is always the biggest yield determinant.

The quarterly stocks report reads like this. Corn stocks on hand as of March 1 are guessed at 6.160 billion bushels versus 6.523 a year ago. That is fairly bullish. Beans 1.371 billion versus 1.249 last year, slightly bearish; and wheat was 1.250 billion bushels versus 1.425 last year. These two conflicting reports collided Friday to create some wild trading. You could have a bullish quarterly stocks report with old crop futures up and a bearish acres report with new crop futures down or vice versa. Old crop futures are the months prior December corn and November beans. New crop corn is December futures on out and November beans on out.

There’s talk that when we enter next week we could be looking at a frost and freeze across the Midwest. With winter wheat emergence in the plains ahead of normal this would create fear that wheat acres in number one U.S. winter wheat producing state, Kansas, could be widely affected. It appears the soft red winter wheat in the eastern grain belt of Illinois, Indiana and Ohio would see the coldest temperatures, but the heads are not developed as were still in the greening up stage and usually less affected by the effects of frost. But the market trades fear before fact.

With trend following funds short 81,000 contracts, a short covering rally on fear could push wheat to $6.90 quickly. We first have to close over the May futures’ $6.64 resistance on the charts. Technicals read like this. May corn support is $6.30, if a close under $6.38 occurs. Support for May beans is $13.30. May wheat support rests at $6.44. Buy a close over $6.66.

CLASSIC WEEK THREE

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Friday, March 23:

Fund trading patterns were prevalent again this week as prices fell on profit taking as the third week of the month entered. Funds traditionally buy long ahead of each monthly USDA crop report release on the 9th, 10th or 11th of the month or the second week. Then, the third week, they take profits to pay those handsome bonuses before month’s end.

We actually had two rallies and breaks this month. We rallied ahead of the March 9 crop report then broke, then a new high rally after the report followed by another profit-taking break.

Next week brings the release of the March 30 planting acreage report on Friday, and traders have plenty of time to get positioned ahead of it.

When corn, beans and wheat hit new highs for the month this past Sunday night — and new highs for the year on corn and beans — it was an easy decision for fund managers to bank profits in week three. Next week takes on a very different look and feel. On Friday, March 30, at 7:30 a.m. Central, the USDA releases its big planted acreage report as to how many acres of each grain farmers intend to plant. Each day leading up to the report there will be trading by bulls and the bears. It is a spread trader’s dream as it kicks off the season for old crop, new crop spreads because just as the acres to be planted emerge, so does production for December new crop corn and November new crop beans. Bulls will buying the old crop corn and bean futures and selling the December corn and November new crop bean futures. Bears will be doing the reverse.

Traders will debate what farmers will plant based on the most profitable crops currently. Of course farmers protect their most valuable crop, their land, by exercising crop rotation. That suggests less corn and more bean acres than people think (they planted more corn and less beans last year.)

In terms of value, corn has increased 6%, wheat 15% and beans 17%. Fertilizers for corn and wheat are higher this year with anhydrous ammonia, up 5% and potash up 12%, so playing with general numbers, the overall fertilizer cost per acreage is up on wheat 20%, corn 17% and beans 4%. There’s so much for the non-farmer trader to consider, and that means we should expect a lot of two-sided wide swings daily.

About the weather: traders will wait to factor in current and long-term weather implications until after the March 30 report. The following week traders will say ‘it’s not what you plant; but what to grow; how’s the weather? WXRISK.com, the weather site, sees a continuation of warmer and drier than normal Midwest grain belt weather through April 2.

Technicals read like this: May corn support is $6.38 then $6.30, resistance is at $6.56 then $6.84. May bean support is $13.30 with resistance at $13.75 then $13.90. May wheat support is $6.44, then $6.32. Resistance there is $6.64.

TRIM THE FAT(2)

Grain Market Comments

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@PFGBEST.com

Tuesday, March 20, 2012 at 4:10 AM

………… Monday started with new high prices for the month on the Sunday night overnight trade but long-held positions fat with profits started to trim some of their long positions pulling prices lower overnight and on the day session Monday. Down days have been hard to come by in the month of March with fear of lower ending stocks on the March 9 USDA monthly report. Fear of not enough acres to show up planted on the March 30 planted acreage report and the battle with higher prices between grains to ensure they maintain a price high enough to each other not to lose acres this spring planting. The funds can pay handsome bonuses on profits taken before month’s end. This is a good week to take profits even if we close higher on the week as profits can be taken from rallies. Traders see next week as the week of the big March 30 crop report on acres to be planted, so it should be a week of spreading, especially spreading July/Dec corn and July/Nov. beans , or old crop , new crop month spreads and two side trading as everyone spreads out risk and even up some positions prior to the report. The first of several media polls of the brokerage industry as to their pre-report estimates on acres, comes out Friday and another Monday giving us a look at the industry thoughts. This will affect trading next week. So this is an uncertain week as were between the big march 9 and March 30 reports. Technical’s read like this, support on May corn is 6.60 then 6.52 with resistance 6.84. Support on May beans is 13.55 then 13.30 with resistance 13.75 then 13.90. Support for May wheat is 6.42 with resistance 6.68.

STRONG CASH

Grain Market Comments

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@PFGBEST.com

Friday, March 16, 2012 at 11:13 AM

………………… Thursday’s weekly export sales report showed 836 t.m.t. of corn was sold last week, up from 455 the week prior and 743 on our solid four week average. No Chinese purchases but Mexico was in for 222 t.m.t. and in for the 15th consecutive week. Rumors of China in buying or set to buy, surfaced almost every day. There’s talk China’s corn reserves have been depleted and with the drought in number two world producer exporter Argentina ,most feel China need to purchase US corn sooner than later. If the Argentine government decides to suspend indefinitely corn exports we should expect a $.50-$.75 gain in futures on anticipation of exports here increasing. Argentina is looking deeply at this year’s crop to see what the harvest may really be as they need about 8 million metric tons to meet domestic needs and don’t want to over export and fall short such as Russia did on their wheat drought that left them short of needs to meet their own demand, creating strong price inflation and civil protests. Bean exports were 609 t.m.t. for current crop year delivery prior to September 1. This was under the week prior, but China was in for 368 of the total and further shows China feels South America can’t meet their near-term needs as normally they would be all over Brazilian ports buying especially with over half their crop harvested. The issue getting a lot of attention is next year’s new crop year exports for September 1, 2012 into 2013. Thursday’s export report showed 669t.m.t. were sold to China for September 1 on out delivery. This has been the case lately, as were seeing good current crop of year and new crop year purchases by China. Our March 9 USDA monthly crop report put next year ending stocks at 205 million bushels from 275 this year. Traders are thinking that next years ending stocks are heading significantly lower on demand due to lower South American production and potential for fewer acres to be seeded here this spring. Our government here has made an effort to hold the line of old crop exports to keep from running out and pushing exports forward. This forward selling started last spring and all that forward selling comes to a head in 2013 with potentially one of the smallest ending stocks inventory on record. The March futures expired this week making may the front month. With Midwest temperatures all next week over 70° we look for farmers to be in the fields turning soil and applying chemicals. This looks to further push cash corn and bean prices higher and further drain the pipeline of grain coming to export ports. Farmers are too busy to move grain. Strong cash prices, the ongoing battle for acres with price gains and fear the March 30 planted acres report won’t show enough to be planted to build safer inventories, all lead to higher prices this next week. Technical’s read like this. May corn support is 6.60 then 6.50 with resistance 6.84. May bean support is 13.55 then 13.35 with resistance. 13.75 Then 13.50. May wheat support is 6.40 with resistance 6.70 then 6.90.

ONE DOWN, ONE TO GO

Grains Analysis
by Tim Hannagan, PFGBEST
1-800-563-9510
thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Tuesday, March 13:

Well, our first crop report of the month came out. That leaves just one more, the March 30 planting intention report when farmer estimates show intended acres to be planted for corn, beans and spring wheat. Needless to say, new high prices for the month will be seen as the market trades the fear we won’t plant enough acres of corn to build reserves and bean acres could come in lower – much lower – further diminishing ending stocks.

The fear factor is one of the most important pricing tools funds have. These funds rallied corn 40 cents into last week’s monthly USDA crop report, beans $1.25 and wheat 50 cents, all on fears that the report would lower South American crop production, raise U.S. export projections, and lower ending stocks.

Here are the report day facts: they lowered production and left export projections and ending stocks unchanged. This has been the government’s conservative reporting pattern since last spring. They only gave samples of the problems leading to lower production and yields each month during the spring planting flooding and July drought-like conditions…and now, South American production estimates and demand numbers are above what the trade expected.

It seems the government is trying to keep futures from going into in upward spiraling pattern creating even more food inflation in an election year, while they battle the unfavorable inflationary pattern of crude oil and gasoline prices. So, though we expect the funds to price in bullish fear heading towards the March 30 report, the consistent conservative reporting policy of USDA should lead to profit taking that will occur several days prior to its release.

Current news is a little more friendly for corn, with rumors of China buying up to 600 thousand metric tons of corn with a USDA announcement of 240 thousand sold to an unknown destination today. The trade believes unknown is China.

Monday, the Argentine government essentially suspended corn exports until early April. This was to closely look at this year’s drought-stricken corn crop, to get a better idea of crop size in an effort to curb exports so they don’t wind up short of corn for domestic use.

Several issues are arising out of this. One: Argentina may indefinitely suspend exports, setting up a sharply higher move in corn prices, since they are the number two world producer exporter. Two: it suggests they are getting farm reports that the crop is smaller than current estimates, which will support current prices and/or they will resume exports setting up a one-day drop in prices to offset Monday’s 10-cent higher price off the news.

Technicals read like this. Support on May corn is $6.48 resistance $6.66 then $6.79 and up to $6.84. May bean support has resistance at $13.40 and again at $13.75. May wheat support is $6.40 and resistance is $6.70.

Trim The Fat

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Monday, March 19, 2012:

TRIM THE FAT………… Monday started with new high prices for the month on the Sunday night overnight trade but long-held positions fat with profits started to trim some of their long positions pulling prices lower overnight and on the day session Monday. Down days have been hard to come by in the month of March with fear of lower ending stocks on the March 9 USDA monthly report. Fear of not enough acres to show up planted on the march 30 planted acreage report and the battle with higher prices between grains to ensure they maintain a price high enough to each other not to lose acres this spring planting. The funds can pay handsome bonuses on profits taken before month’s end. This is a good week to take profits even if we close higher on the week as profits can be taken from rallies. Traders see next week as the week of the big March 30 crop report on acres to be planted, so it should be a week of spreading, especially spreading july/dec corn and july/nov. beans , or old crop , new crop month spreads and two side trading as everyone spreads out risk and even up some positions prior to the report. The first of several media polls of the brokerage industry as to their pre-report estimates on acres, comes out Friday and another Monday giving us a look at the industry thoughts. This will affect trading next week. So this is an uncertain week as were between the big march 9 and march 30 reports. Technicals read like this, support on may corn is 6.60 then 6.52 with resistance 6.84. Support on may beans is 13.55 then 13.30 with resistance 13.75 then 13.90. Support for may wheat is 6.42 with resistance 6.68.

EXPORT SALES

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Thursday, March 8:

Today’s weekly export sales report was a mixed bag. Wheat showed 446 thousand metric tons were sold last week for shipment prior to June 1. That was off 8% from the week prior and below the 4-week average of 560. With ending stocks over 8 million bushels at a level that is double what we once considered tight stocks, only supply-side fundamentals [not demand side] can rally wheat. Supply-side fundamentals will be addressed on Friday’s USDA monthly report, and in the March 30 spring wheat planting intentions report as well as through weekly weather updates concerning the now emerging U.S. Southwest winter wheat crop.

To date the El Nino weather pattern has the jet stream pulling storms along the southern U.S., Texas, Oklahoma, and southern Delta. If that continues, it will improve quality levels over the hard red winter wheat states, but the soft red winter wheat grown in the Midwest and delivered on the CBOT exchange contracts, grown largely in Illinois, Indiana and Ohio, could remain very dry.

Dormancy normally breaks in April, but temperatures hit the 60-degree mark this week, and the outlook calls for 70-degree temps in the region next week! With that, and if it is dry, emergence could begin early.

Trend-following funds are currently short a near-record 90,000 contracts; if weather becomes bullish, a short-covering rally could occur quickly. For example, in 2010 funds bought back 50,000 of 88,000 short contracts when weather issues arose in Russia, and wheat rallied $1.80! Be aware, be ready.

Corn exports were 445 million bushels versus 807 as our 4-week average. China was absent, while Mexico came in for the 14th consecutive week, but only for 74 thousand metric tons, opting to buy more for 2012-13 delivery after September 1.

All the talk of China simmers, and it’s long-term bullish, near-term neutral. Their expansion of hog, chicken and corn-based ethanol has corn usage at a record pace, but they’re feasting off reserves from last year’s better harvest. It looks like problematic weather conditions are arising that could cut production measurably this year. The trade sees China entering when their current prices eclipse ours and reserves are tightest; that would time it to June and later with deliveries slated more for the 2012-13 marketing year that begins September 1.

Bean exports were a whopping 1.015 million metric tons for our current crop marketing year. This was over the 4-week average of 686 thousand metric tons and it was 86% over the week prior. Two of the last three weeks have been over 1 million. It’s a red flag telling us they have accepted that the South American crop will be shriveled by drought and that they need to turn more aggressively to the U.S. This has traders buying beans and selling corn today as a spread.

All eyes now turn to Friday’s USDA monthly crop before at 7:30 a.m. Central time.

PROFIT TAKING

Grain Market Comments

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@PFGBEST.com

Wednesday, March 07, 2012 at 8:28 AM

………….. Monday saw classic two-sided trade prior the release of Friday’s big USDA monthly crop report. Corn, beans, and wheat saw measurable buying prior the beginning of the new month with all three making new highs for March Monday before profit-taking set in with more profit-taking on Tuesday’s opening. As we narrow into the final days prior the reports release, we see everyone offsetting or balancing the risk prior the report with more two-sided trade. Longs fat with profits sell the rallies, shorts buy the breaks and the spreaders un wind. Friday saw traders unwind their long corn, short wheat spreads and Monday their long bean short wheat spreads. Each day prior the report release at 7:30 AM central time Friday, we should expect similar uneven trade. Bloomberg news agencies poll of 28 analysts, myself one of them, came out Monday as to what the report may say. The key to the report is ending stocks. That’s the amount of grain expected left over at the end of our grain marketing year. Our savings account. Marketing year for wheat ends may, 31 with corn and beans August 31. The new marketing years began the next day to coincide with their new harvest. Corn ending stocks average gas is 776 million bushels versus 801 last month, and 1.128 billion bushels in 2011. The range of guesses is 680-825. To open higher and close higher, we need to come in under the low average. Anything above that. but under the month prior, we opened higher but selling enters. Anything over the high-end and we open and close sharply lower as they will take previous profits gained in February and March. Beans came in at 253 m.b. versus 275 last month. Ranges were 188-275. Apply the corn scenario for trading. Wheats average guess was 837 m.b. versus 845 last month and arrange a 803-878. All the average estimates are lower as a result of lower average estimates on corn and bean production out of Argentina and Brazil. The trade is always more bullish than the USDA who has consistently taken a conservative stance on production yield estimates here in the US since last summer and in South America recently. So we shouldn’t expect an overly bullish surprise but a friendly report. Should we rally report date, we still look for profit-taking days following, then renewed buying and new highs prior to March 30 planting intention port. The question is how much of a break and how long will it take before traders re- focus and re-position long before the March 30 report. WXRISK.COM the weather sites sees generally dry conditions in the 7 to 10 day outlook for Brazil speeding up harvest with wet conditions in Argentina the next five days. There was some talk of the dock workers strike in Argentina slowing grain shipments, but these work stoppages or slowdowns don’t last. In Argentina and Brazil dockworkers and truck drivers are among the highest paid jobs. Truck drivers hauling grain to port have been found shot to death in their trucks as bad types try to create a job opening. So don’t trade the stoppages, their short-lived. Support for May corn is 6.52 then 6.44. Resistance 6.64 then 6.74. May bean support is 13.25 then 13.10, resistance 13.40 then 13.75. May wheat support is 6.55 then 6.35 with resistance. 6.90.

SPLIT MONTH

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Friday, March 2:

It’s the beginning of a new month, but the end of the week. Traders are more concerned with the pre-weekend risk thinking, though, and it’s leading to a more subdued 2-sided trading on this Friday. When we enter Monday, the psychology will turn to new month thinking instead, and the focus will be on re-establishing a foothold on longer-term positioning.

Grain traders are looking ahead to the Friday, March 9 USDA Crop Report due out ahead of the open. Traders will expect the report to raise export projections and lower ending stocks. Here’s why: demand was measurably better in February over January. Corn exports were 2.333 million metric tons in January and 3 .451 million in February. Bean exports in January were 2.171 million metric tons and 2.506 in February. Couple increasing demand with the general overall opinion that weather conditions in February were less favorable for corn and beans in Argentina and Brazil. There was a 7-day heat dome with temperatures over 100° that offset any small rain events. But now that the growing season is ending in South America, weather concerns about that crop is limited to the effect on harvest progress.

Our ag weather site WXRISK.com sees a generally warmer and drier 10 days ahead for Brazil’s speeding-up harvest. That in itself is bearish as it allows Brazil to become the world’s primary port for affordable beans. Offsetting that psychology is the yearly harvest problems that lead to their two small ports that can’t handle the business. Ships already are backed up and can’t get into port, while trucks filled with early harvested grain stretch miles. This is the norm. It always seems that dock workers demands for more pay surface this time of year, leading to work slowdowns, followed by China turning to the U.S. ports to fill needs.

Next week’s psychology is largely about the USDA report Friday and traders wanting to get possession by going long. But don’t expect any large surge in prices as traders know that recent government reports have come out very conservative on adjustments. Traders will buy marginally into the March 9 report followed by profit taking after it. Then, they’ll quickly turn to buying again prior to the March 30 planting intention report when farmer surveys show how much of each grain will be planted.

Monday technicals read like this:

May corn support is $6.46 then $6.42 with resistance at $6.64 then $6.74. May bean support is $13.10 with resistance at $13.40 then $13.75. May wheat support is $6.48 with resistance at $6.90 and $7.10.

Grain Analysis(5)

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Tuesday, Feb. 28:

A BREAK TO BUY

Monday brought wide swings as corn and wheat were down $.09 in early trade, pricing in bearish outside market action. Then, the market turned up and gained $.04 to $.12, with soybeans up $.15. The factors that drove prices back to the plus side were demand and bullish thinking/positioning ahead of the upcoming March crop report.

There were no new export sales announced ahead of Monday’s opening, but the weekly export inspections report, a gauge of near-term demand, came out as a reminder of a simmering export market that looks like it wants to boil over.

Corn inspected for near-term export came out at 27 million bushels versus 25 a year ago and just under our strong 4-week average of 31. That equaled last year’s strong pace, though bears had expected exports to go down.

Bean inspections were 36.9 million bushels versus a strong 4-week average of 38 with China in for 25.6 of the total. As I have noted in past articles, demand is very good but not great, at least not yet. To turn the corner from good demand supporting prices to price rationing and spiraling futures, we need a problem with U.S. crops to couple with the crop problems recently in South America.

Our problems leading to my belief that production will be lower than expected start with the planting intentions report and end with the growing seasons. The planting season question will come to roost on March 30 when the USDA planting intention report releases farmers’ estimates on acres to be planted. Regardless of bullish or bearish pre-report estimates, the market fears are we won’t plant enough corn or beans to meet demand and then we can’t build ending stocks. The market trades the fear before the fact. Expect higher prices prior the report.

First, however, the market looks for the March 9 USDA crop report showing the February production ills in Argentina and Brazil. Traders are creating fear the report will bullishly raise U.S. export projections and lower ending stocks. Tuesday’s action saw us down a couple cents on the early overnight trade. Grains closed higher overnight and the day session opened with aggressive buying.

Corn settled just over the $6.48 May resistance on the overnight and then brought more technical buying up to $6.57 then $6.58 once $6.48 was taken out.

Beans were largely technical as well. May closed over resistance at $12.95 on Monday, which was our high from last October, setting up a series of upside technical resistance prices I gave on Friday’s report; these were $13.15, $13.20 then $13.70. Today’s high was $13.14. It was all technical today.

Tomorrow is the last day of February, so we can’t be surprised if some of these fat long positions take profits. Support on May corn is $6.48 and May beans have support at $13.00.

Traders continued to build their base bull structure from the uncertainties that lie ahead on the March 9 and March 30 reports.

Grains Analysis(14)

Grains Analysis
by Tim Hannagan, PFGBEST
1-800-563-9510
thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Thursday, Feb. 23:

Thursday Update:
The AG forum conference released some numbers for grain traders to think about. They put corn acres at 94 million acres to be planted, up from 91 last year and in line with pre-report expectations. This had new crop December futures down 6 cents after today’s opening. I look for the March 30 planted acreage intention report by the USDA to come in under that, as last year’s planting of more corn and less beans (and a strict policy of crop rotation) sets us up to see a smaller corn and larger bean number than the form suggests.

Beans were left unchanged at 75 million acres but expect that to be bigger in the March 30 report.

Wheat was put at 58 million acres, up 3.5%; northern plains wheat acres flooded out last spring are coming back online. Now, when we come in next Monday, they will ask ’what form report?’

The trade understands from years prior that forum participants are government workers who study grain psychology, while the March 30 planted acreage report has the farmers’ survey; the two tend to think very differently.

We have four days left in February. Should grains pulls back for any reason, such as final month-end profit taking, buy long going into March 1. The March 9 USDA crop report will be feared to show lower ending stocks for corn and beans as February’s weather in Argentina and southern Brazil was less than beneficial for yields, especially with last week’s 7-day heat dome that stressed crops. Additionally, February, corn and bean demand jumped, and that lays the stage for a bullish report as export projections increase.

Next we have the March 30 planting intention report. The key here is corn and bean ending stocks are tight demanding more acres of each to be planted at least to keep pace with demand. Remember the slogan “the market trades fear before fact.” The fear is acres won’t be enough to build on inventory and if you don’t plant enough to ensure inventories building, even on a marginally dry growing season, then we’re set up to depend on the weather. And as we always say, whether is always too hot somewhere and not enough rain somewhere else. So expect traders to be aggressive buyers on dips with our March 30 close measurably higher than the February 29 close.

May corn has support to buy at $6.32 Friday. If that is not hit, it’s $6.34 Monday. If that breaks, $6.20 will be next as our worst-case downside projection if results allow. Resistance is $6.50 through Wednesday. If that is taken out, watch for $6.58 and $6.66 next.

May bean support is $12.50 with strong chart line support at $12.40. If resistance at $12.90 breaks, it will set up a series of minor resistance points at $13.15, $13.20 then $13.70.

May wheat support is $6.25 then $6.00. If the $6.50 resistance gets taken out, look for $6.90 next.

Grains Analysis(13)

Grains Analysis

by Tim Hannagan, PFGBEST

1-800-563-9510

thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Wednesday, Feb. 22:

SHORT WEEK

This week’s opening (Tuesday, due to the holiday Monday) brought opening selling for the grains, with corn and wheat down hard and beans up in the latter part of the session. Rain that had been forecast for South America over the weekend was more than ample.

Central Argentina saw 60% coverage of up to 3 inches. The rain was lighter in southern Brazil, but Argentine rains were the best in three months. WXRISK.com, the ag weather site, sees 200% to 400% of normal rainfall in central Brazil — 5 to 10 inches worth – over the next five days. This will disrupt the harvest currently underway.

Southern Brazil is more dry and rains are marginal there and in central Argentina.

Weather looks to be a neutral to slightly negative pricing source into the weekend.

This week’s export inspection report confirmed an improved demand outlook. Wheat inspections were 22 million bushels versus the 18.9 last week and a 4-week average of 16. Corn was 34.7 million bushels versus 29.1 last week and the 4-week average of 31. Beans inspected for export during the period were 38.4 million bushels; the 4-week average is 37. China was in for 27 versus 25 last week.

As long as production declines continue in South America, expect demand for U.S. grains to expand as importers come to our ports as crop insurance.

The USDA Outlook form results will be released Friday; that will become an early look at what the upcoming March 30 planted acreage intention report will say. The common thinking, is, it will show greater corn acreage and less bean acres to be planted this year. This keeps a general floor under the market. The only bullish news yet to come out that’s not in question is the Friday weekly export sales report, which will be bullish showing last week’s big beans and corn exports.

Month-end profit taking remains a threat ahead of what should be a very bullish month in March.

Key prices to capture and buy if seen are $6.20 on May corn, $12.40 May beans and $6.00 for May wheat. To see those prices, we first have to break minor support at $6.30 for May corn, $12.52 for May beans, and $6.25 for May wheat.

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