Highlights
Novooleksiyivka is a town in the Kherson region of Southeast Ukraine now occupied by Russians. The local grain elevator’s contents were loaded in train cars and headed southwest to Crimea where there are dozens of ports to load ships. This is important to you because there is potentially a lot of Ukraine’s grain going to make it into the export market after all. The defenders at the elevator must have a “loyalty problem”, otherwise, they would have set the grain on fire as they retreated. If this “loyalty problem” is consistent across grain areas of Southern Ukraine, the majority of Ukraine’s old crop corn and wheat will be exported in the coming months.
Ukraine will be able to export 745,000 mts of sunflower oil this marketing year (ends in August 31) according to APK-Inform agriculture consultancy. That is more than enough to cover Europe’s needs.
On Saturday afternoon, it was reported the Ukrainian grain trading firm UTA GROUP has silos in the battered city of Mariupol on the Black Sea with the grain on fire.
Anhydrous ammonia at the port in Tampa fell more than 12% Friday, the biggest one-day drop in three years as less demand for Asia and less than expected spring demand in the USA coupled with ammonia production in Europe restarting caused distributors to drop prices in a panic on Friday in an effort to find some demand. Anhydrous dropped from $1,618 to $1425.
Wells Fargo gave the pink slip Friday morning to 550 of their mortgage processors. On Wednesday, the 30 year fixed interest rate for home mortgages hit 5% for the first time in more than decade.
Sixty days ago a farmer got a loan approved for a major equipment purchase. He went shopping for the machine. Forty-five days after the loan was approved he went to get his money. The interest rate was 2% higher than it was when the loan was approved. No, he did not lock in the rate when the loan was approved. For the foreseeable future (a couple years and maybe 6 to 8 years), always lock-in the interest rate on any loan as soon as you can.
As soon as we get done with the lessons on put options, we will begin explaining how interest rates can be hedged just like grain.
Tech Guy’s Comments
Sometimes during bull markets, it is difficult to know when a correction is occurring. Because all the dips and backfills are bought by the funds, these corrections tend to be shallow and nondescript.
Both corn and soybeans have been trading in a range the past few days - a correction I supposed. However, after Friday's sharp selloff, I determined this was a selling capitulation which was the correction ENDING. From this, we backtrack to near the April 1st timeframe and see the first up-leg is complete which lasted 17 days in soybeans and 20 days in corn. (both July contracts).
The most likely scenario then is another 2 up-legs (each 17-20 days in duration) for this current rally. Using Elliott Wave Theory, the first and second legs are complete and the 3-4-5 legs are upcoming.
The next up-leg (wave 3) should last 17-20 days. This takes us to the May 9-12 time-frame. From the length of the first up-leg, which began near April 1st (+ $1.19 in corn, + $1.74 in soybeans), I can estimate the ending price of wave 3. From the low of Friday's trade, I calculated $8.99-$9.44 in corn and $18.50-$19.16 in soybeans by May 9-12 timeframe. The lower price is estimated if the 3rd wave (2nd leg up) is the same length as the one we just completed. However, the 3rd wave is usually longer than the 1st and this is how the top numbers are calculated.
Again being in a bull market there should be a 3rd leg-up (wave 5) after wave 3 corrects. However, anything can happen, so we will worry about that after May 12th. For now, we have chart estimations for corn and beans for the next 3 weeks or so.
On Wednesday, I mentioned the July Wheat correction should be near complete also. Friday's trade confirmed this. It should rally back to $11.50 where it will attempt to breakout and rally to the previous high of $12.78¼.
Rain Days Update
The Western Corn Belt has 1 more rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 3 less rain days than yesterday.
