After showing a little life last week, grains returned to the downside this week following renewed concerns or progress of a trade deal with China in my view. As said many times on my thread, trade the charts and do your best to avoid the noise. Planting windows are starting to show up in the Midwest next week in the knick of time for some producers providing some bearish tilt as well. Overall it appears that corn and beans will be late arriving this year as late planting brings increased talk of prevent plant and lost acres especially for corn. The trade news (soap opera drama) with China, Mexico, and the EU are demand driven headwinds in what should be supply side driven markets now that corn, beans, and spring wheat crops are being planted. Trade the charts. Corn of course could be a big gainer should lets say the Chinese commit to future purchases. If no deal any future rallies could later be seen as a reason to sell or hedge as the old crop carry-out now sits at 2 billion bushels for corn. Funds are short approximately 318,500 corn contracts and actually short covered about 27 K last week according to the last two COT reports from the CFTC. Their overall grain short among seven grain contracts though increased into this week coming in at 699, 600 from 692,100 the week prior. WX Risk the Ag Weather site sees cool and wet in the 1 to 5 day (5/7-5/12) in the Midwest, then a drying out period for much of the Midwest in the 6 to 10. End of month forecasts see cool and wet returning all the ay to June 3rd per some European model long term forecasts, so producers will be racing in to the fields when possible. Planting corn after May 15th and the crop is susceptible to lower yield. See chart below, July corn support at 362.2. A close under and major support at 359. Under 359 and its 350.4. Under 350.4 and its 338. Resistance comes in at 370. In my view its a major trendline and if we can close over it may prod the funds to begin to cover. (See blue arrow) A close over and its 375 quickly and then 382.2. Major resistance is up at 388.4 which in the calendar year high. Call or email me at 888 391 7894 or slusk@walshtrading.com
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