Weekly Recap
2/26/2016
Weekly Commentary for the Week Ending 2/26/16
By Jalen Pietig, Grain Originator/Field Marketing Advisor
Highlights: Another surge to the bottom of the trading range this
week, highlighted mostly by the USDA Outlook Forum, good South
American weather, a slipping wheat market, and a stronger U.S.
dollar.
USDA released its balance sheet projections this week, with acreage
estimates presented to the market Thursday morning and
yield/ending stocks data presented Friday morning. The speculative
trade certainly pre-traded the forum as well, adding to their short
positions early in the week. The data itself consisted of no real
surprises, just confirmation that corn acreage is expected to rise (90
million acres compared to 88 million acres last year), and soybean
acreage is expected to be about steady (82.5 million acres compared
to 82.7 million acres last year). Overall, the forum provides a nice
early insight to what the industry expects to plant this year, but past
data shows that the numbers shouldn’t be taken to the bank. There
have been multiple times in the past 5 years where USDA either overor underestimated the corn or soybean acres by 3-4 million. For what
it’s worth, they have overestimated corn acreage by at least 1 million
bushels each of the past 3 years and underestimated soybean acreage
by 3.8 million in 2014.
Technically, the corn and soybean markets dipped below their key
moving averages Tuesday morning and never looked back the rest of
the week, closing in oversold territory. May corn sits 5 ¼ cents off
contract lows, which should be an area of support in the short term.
However, without any substantial news rallies should be capped by
key moving averages and monthly highs. For corn, those short term
areas of resistance would be $3.69, $3.73 ½, and $3.78 for the May
contract. The December contract will look to get through $3.87 and
$3.95. The corn market is oversold on the daily charts but not the
weekly charts. Soybeans are edging into oversold territory as well on
the daily charts, and May soybeans will look for support at $8.56 and
the $8.53 ½ contract low. Resistance points look to be $8.76 ½, $8.83,
and the double top of $8.90.
The U.S. dollar formed a key reversal higher on Friday, with ideas that
the Fed will talk about another interest rate increase in March’s
meetings.
All in all, corn and soybeans will look to find support again at the
bottom of our trading range. The range hasn’t changed, but the large
ending stocks and lack of bullish news seems to cause a quick drop to
the bottom and a long climb back up to the top.
Corn Weekly Change
Contract
Close
Change
% Chg
May 2016
3.5950
-9 ¾
-2.64%
July 2016
3.6425
-9 ½
-2.54%
December 2016
3.7825
-8 ¼
-2.13%
July 2017
3.9475
-7 ¾
-1.93%
December 2017
3.8700
-6 ¼
-1.59%
Soybeans Weekly Change
Contract
Close
Change
% Chg
May 2016
8.6350
-17 ¼
-1.96%
July 2016
8.7000
-15 ¼
-1.72%
August 2016
8.7250
-14 ¼
-1.61%
November 2016
8.7600
-12 ½
-1.41%
November 2017
8.7700
-9 ¾
-1.10%
Upcoming Reports
Mar 3
Export Sales (7:30)
Mar 9
USDA WASDE (11:00)
Mar 31
Prospective Plantings (11:00)
Weekly Recap
2/26/2016
Global Weather
The MEI is a reading that shows departure from normal conditions in the tropical Pacific. The current reading
shows over a 2 point departure from normal, meaning a strong El Nino is still present. Readings well below 0
signal La Nina events.
Source: NOAA
The 15-day % of normal forecast for Brazil shows a wetter bias the next two weeks. Brazil has been rather dry
the past few weeks, allowing producers there to harvest soybeans and plant Safrinha corn without disruptions.
Source: World Ag Weather
Weekly Recap
Fund Analysis
Corn: Net short 138,000 contracts (added 437 to short position)
Soybeans: Net short 12,442 contracts (subtracted 20,630 from short position)
Source: CME Group and CFTC.gov
2/26/2016
Weekly Recap
Corn Technical Analysis
50-Day M.A.
20-Week M.A.
Slow Stoch. K
Slow Stoch D.
Stochastic Status
Corn – May 2016
Corn – December 2016
$3.69
$3.76
8.1%
16.6%
Oversold
$3.87
$3.92 ¼
9.6%
22.4%
Oversold
May 2016 Corn above, December 2016 Corn below
Report Date:
July 10, 2015 – 11:00 A.M.
2/26/2016
Weekly Recap
Soybeans Technical Analysis
50-Day M.A.
20-Week M.A.
Slow Stoch. K
Slow Stoch D.
Stochastic Status
Soybeans – May 2016
Soybeans – November 2016
$8.76 ½
$8.81 ½
15.5%
29.7%
Slightly Oversold
$8.86 ¼
$8.89
16.7%
29.1%
Slightly Oversold
May 2016 Soybeans above, November 2016 Soybeans below
Report Date:
July 10, 2015 – 11:00 A.M.
2/26/2016
Weekly Recap
Energy Commentary for the Week Ending 2/26/16
By Curt Meyers, HLC Energy Division
The sun lives! I was beginning to wonder if we would see it again. At this point, the forecast looks nothing
short of awesome. The 10 day shows only two days with below-freezing high temperatures. Although this is
not conducive to Energy sales, you won’t hear me complain! This being said, we should continue to see
Heating Oil and LP trade relatively flat for near future. Stocks for both of these products remain at record
levels with no major draws predicted.
We should see Heating Oil continue on it’s “range-bound” path, but overall remain steady over the near
future. Again, if you haven’t filled your tanks, now is a great time to put your order in. Don’t wait until your
yard is dry or frozen to call!! Put your order in today! We will lock you in at the current fill price. Let us
worry about getting you product delivered in a clean, timely manner.
Propane continues to be cheap- cheapest we’ve seen in years. Don’t let this lull you to sleep, however. Once
we get through spring planting, taking a look at your needs will be very important. In my opinion, and take
that for what it’s worth, we should see some corn drying this year. My prediction is a wet spring. We will
enter the season with saturated ground. My sump pump ran all of November and half of December, and I
heard it kick back on last week. If you follow the 90 day fog/rain rule, April looks quite wet…..but hey. I’ve
been wrong before!
What happened with Gasoline?? Great question, I’m glad you asked it. A couple things have happened. If
you look at the chart below, you will see the seesaw effect that has been happening with the NYMEX. In the
last week, we have managed to gain about 7 cents on the nearby. So how does that equate to 13 cents at the
pump? Basis! Basis is almost as evil as ISIS, but that’s neither here nor there. Since February 8th of this year,
basis on Gasoline has risen almost 36 cents per gallon. Hopefully this helps clear the air a little bit.
Get those propane fired grills dusted off. It’s gonna be nice out this week! Have a safe and happy weekend.
Curty
2/26/2016
Weekly Recap
Last but not least, the most important news of the week.
Children tend to grow faster in the springtime than they do the rest of the year.
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2/26/2016