Soy Complex
To say its been one of the more volatile weeks for beans would be an understatement. The weekly range was 76.6 cents basis May futures. Tariff talk, saber-rattling, weather both in north and South America have funds, specs, and hedgers spinning their wheels as volatility reigns. The backbone to me for the continued rallies from the dips in beans this week has been the action in soy meal. While it ended the week up 3 handles, a very light push higher, the fact that it didn’t break and rallied 20.0 points or short tons from the Wednesday morning tariff lows tells me this soy meal market has legs. Whether it be commercial end-user buying due to a reduced crop in South America or a rising basis bean down there, watch the meal as your trigger for beans. I want to keep it simple but if you have been reading this grain spread post we have been pounding the pavement regarding using meal as your clue or trigger for meal. Major trend line support is 384.1. We closed today at 386.3. A hard close under and the market will move to the next support line at 361.1. Next resistance is at 401.2. A close above that level and we move higher to potentially test 437.2 basis May. Funds hold a sizable long in the market, but will quickly add more should end users get caught short bought later this spring/summer. A trade worth considering if bullish would be to buy the July 18/Dec 18 meal spread at 14.0 over with a tight stop under 10.0. This spread has a double top at 25.0 over that could be revisited if meal continues to push. Tuesday April 10th we have the WASDE report at 11 am central so look for a move Sunday into Monday and then a retracement into the report.
Corn/Wheat
KC Wheat continues to lead the way. We suggested buying it vs corn, Chicago wheat and Minneapolis earlier in the week and after last weeks month end crop report. We have been correct on the first two spreads. However the market saw Minneapolis gain on KC as future questions about spring planting which from a global demand perspective is more attractive due to its protein content. The charts tell me that if I were to sell KC, I would buy Minneapolis against as it looks as if this spread could push to 1.10 Minneapolis over from 91.4 today’s settle. Use tight stops on any entry here as these weather markets can turn on a dime as weather forecasting still remains unpredictable. Corn has had nice recoveries from the overnight dips as its sought after by funds and specs alike while the hedge community awaits in the weeds to pounce on the next move higher for new crop. Calendar spreads in corn I have been staying away from and favoring the options. If we hold support in corn, look to buy a Sep corn 430 call and sell a 380 put for 4 cents into the report. I will have more specific stops and chart levels to consider on Monday. It will be interesting to see if China retaliates with new or increased tariffs over the weekend. Watch the Sunday night open.
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