Developing Countries Will Lead Global Rice Import Growth in 2013-22, Says USDA Rice growers positive California MG prices are UP Russia MG Harvest coming to end Egypt open rice exports Vietnam’s rice export in tough competition with India Thai rice exports in May Rise Above Target This Year Viet-Nam Rice exports likely to fall this year
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Corn futures hit 2.09 basis
CBOT, April, 2005
We kicked off the week’s reports with Monday’s weekly export inspection report showing 29.6 m.b. were inspected for near term export up 3 m.b. over the week prior but well under our four week average of 30 and a year ago of 33 m.b. It was viewed as a negative demand indicator. Thursday’s weekly export sales report put sales last week at 1.158 m.t. up 25% over the week prior and 33% over our four week average. Last week’s better sales came as corn futures hit 2.09 basis May off 21 cents from the week prior high. Japan was the buyer. We would need 1 m.t. or more weekly to turn bullish on demand as is demand is running about 6% behind a year ago. 2 of the last 8 weeks saw 1 m.t. or more sold but the other week’s are low at 700 to 880 t.t. Thursday’s acreage report projected corn planting this year to be 81.413 million acres. This was about a half million acres more than last year’s record crop and 4% more than 2003. Corn had expected about 2 m.a. more so with the report being not as bearish as thought they traded 5 higher after the open before settling up ˝ on the day. The quarterly stocks number came in bearish as expected with 6.754 b.b. on hand as of March 1 versus 5.271 a year ago. April usually is a down month for corn. Even last year when stocks were tight and we had a big January to April 7 rally we broke 40 cents off the high into month’s end as talk of our record acres going to seed with good weather could yield a record crop, and of course it did. We are starting this April about 90 cents lower than a year ago with prospects for good weather to have another record crop. Until we are at least 30% planted we cannot expect the trade to buy long positions as inventory is ample with stocks over 1 b.b. higher than a year ago and no grain in weather’s threatening way but we can begin to look for the big short position begin held by the trade to get out and buy their way back to a neutral position before buying long. I see May as having support at 2.10 then 2.03 with worst case scenario of 1.92. We need a close over 2.22 to turn chart bullish. Long term position traders can consider this. Buy a June 2.10 put for 3 or 3.5 cents. The cost is about 150 dollars. This gives downside protection through the third Friday in May. Corn should be 80% or better planted by then and any lows should have occurred off the bigger acres and if weather is good. From that point we should expect a weather premium to be built in. Look to buy the September futures currently at 2.27 if and when May pulls under 2.10 and pushes to our third price support of 1.92. I would buy September at any point we trade under 2.00 basis May. Buy the June puts now and hope for the break to buy the futures or buy September when May closes above 2.20. Which ever comes first.

Monday began our reports with the weekly export inspection report showing 20.5 m.b. were inspected for near term export, down from 22.6 the week prior. Not a good demand signal after a 20 cent break in prices last week. Thursday’s weekly export sales report came in at 366 t.t. sold last week up 14% from the week prior but 6% under a week four week average. Again, another weak demand signal. Thursday’s average report put all wheat production at 58.592 m.a. down 1.082 m.a. from last year. Our varieties read like this. Durum wheat 2.608 m.a. versus 2.561. Spring wheat 14.371 versus 13.763 and winter wheat 41.613 versus 43.350 a year ago. The winter crop was down 2/% on the year and the lowest seeding since 1972. Quarterly stocks were 981 m.b. versus 1.431 b.b. a year ago March 1st. Even though these numbers were slightly over pre report trade estimates we traded 8 cents higher in early trade before settling down 2.4 cents basis May. Now, forget the acreage report. Between now and April 10th, we will trade primarily demand indicators. After April 10th, weather becomes 90% of our pricing influence through May 20th, with harvest beginning late May into June. April and May is when yields and quality are made and lost on our winter crop, which is the crop that goes to export. Our spring crop to be planted in May and harvest in late July and August stays home for domestic use. We will worry about spring wheat crop weather come June. Since we cannot predict the weather, we have to prepare for the best and worst of our growing season. Bad weather and 4.00 basis July could be hit. Perfect weather on top of our weak demand situation and 3.10 could be seen. Our first chart support for July futures lies at 3.36 then 3.26, with 3.10 being the February low point in which the recent rally to our March 3.76 high began. First upside resistance is 3.50 then 3.58. Option players can consider buying a June 3.20 put for 6 cents or 300 dollars now and buy July futures on a pull back to 3.25 area. If we get the pull back and you do not want to risk the futures then hold the June put and buy the July 3.40 call and sell a 4.00 call at 15 cents cost and risk with 60 cents or 3000 dollars profit potential. The worst that can happen is the June put will profit enough to cover the call spread. Just a reminder if you do not already have an account at Alaron Trading Corp. and want to use me as a full service broker call me at : 800-563-9510. There is NO minimum account size.
MGR Archive 4.4.2005
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