The following market analysis is for the week ending April 30.

CORN - Same song, second verse as this week's price action retraced last week's losses. July and December corn were each 14 cents higher this week, closing at $3.75 1/4 and $3.92 1/4 respectively. This puts us within a couple of cents of where we were two weeks ago.

The major positive influence this week was the confirmation that China bought 115,000 metric tons (4.5 million bushels) of U.S. corn to be shipped off the West Coast. This is their first U.S. corn purchase in almost four years. What this will ultimately mean to the U.S. corn balance sheet is unknown, but with the current carryout forecast of 1.9 billion bushels the stocks look to be comfortable.

Even if China takes up to 20 million bushels, which private analysts estimate could occur, ending stocks would only shrink to 1.88 billion bushels. China has continued to auction corn from their reserves and has plans for another 1.38 million metric tons round this coming week. The price spread between Chinese corn and imported corn will continue to be monitored, as well as China's willingness to allow imports.

U.S. export sales this week were marginally better than expected at 48.4 million bushels, about double what we need on a weekly basis to achieve the U.S. Department of Agriculture forecast.

Adding to the bullish sentiment were funds covering their short position and a rising energy market. Also lending support was the uncertainty of how the oil spill in the Gulf of Mexico may impact exports. As of this writing, the oil rig collapse on April 22 resulted in an oil leak that was spilling 5,000 barrels per day. The oil had reached the Louisiana shore, but shipping out of the Gulf was as yet unaffected. Values at the Gulf had slipped and barge freight rose on concerns export shipping may be restricted if the oil spill reaches the port entrance.

Nearly ideal planting conditions, a slightly firmer U.S. dollar, and declining equity markets were relegated to the back burner as a friendlier climate prevailed. Corn planting is anticipated to be between 70 percent and 75 percent complete as of May 2 versus the five-year average of 40 percent complete. The May 11 USDA report will include 2010-11 estimates.

OUTLOOK: The market's focus has shifted from rapid planting and anticipation that yield estimates will increase, to wondering what China will do in the corn market. To this end, for the month of April, July corn was up 30 1/4 cents or nearly 9 percent. Technically, corn traded outside last week's range and closed above last week's high which is a bullish signal on the weekly chart. Traders may be cautious of being on the short side in this technical scenario, but friendly fundamental news will also be needed to extend gains.

If Chinese buying goes off the radar, the rapid planting pace and good weather may regain the upper hand in pressuring prices; but until we're further into the growing season the downside in the December contract is pegged at $3.65/$3.55 with upside resistance coming in at $4.05/$4.15. Bigger picture parameters for July corn are $3.35 to $4.

SOYBEANS - As in corn, soybeans reversed course this week as the July contract fell 11 cents to close out the week at $9.99 and the November contract dropped 3 1/4 cents to $9.75 3/4. Last week July beans were up 15 cents and the November was up 13 1/2 cents. A rallying corn market helped limit further losses in the bean pit as fund buying slightly outweighed commercial hedging. There were no deliveries versus the May contract on first notice day April 30 which added strength as we eased into the weekend. The strength in the U.S. dollar, which hit its highest level in a year before fading into the weekend, was tied closer to the price movement in beans versus corn.

Export sales this week were near pre-report projections at 3.7 million bushels for old crop. There were 25 million bushels of new crop beans reported, all for China. Reports from South America of heavy shipments to China support ideas that U.S. sales will continue to decrease. Safras estimates that Brazil's bean harvest is nearly completion and increased their production number to 67.9 mmt from 67.0 mmt. Argentina's bean harvest was reported at 64 percent by the BA Grains Exchange.

Planting progress as of May 2 is expected to have reached 13 to 18 percent complete.

OUTLOOK: Fundamentals are bearish for beans, but outside influences may make the breakdown a slow slide. Using the March low and this week's high (the high for the move), a Fibonacci retracement in July beans puts support levels at $9.85 1/2, $9.75, then $9.64 1/2. During April, July soybeans were 58 cents higher or 6.2 percent, but unless the unexpected happens the longer term outlook is for lower prices. Near term resistance in July beans is this week's high of $10.20; for November beans look for a $9.90 to $9.45 range.

Nystrom's notes: Closing changes this week: July Minneapolis wheat was down 3/4 cents, Kansas City wheat lost 1 3/4 cents, and Chicago wheat was down 2 1/2 cents. June crude oil gained $1.03 to $86.15, heating oil and gasoline were each up 4 cents, and natural gas was down 4 1/4 cents. The Dow declined 196 points, gold rose $27.00, and the U.S. dollar index was up 0.37 to 81.87. S&P downgraded Greece's credit rating to junk status this past week. The next USDA monthly supply/demand report will be released May 11, which will include the first estimates for the 2010-11 crop year.

<center>&#8226;&#8226;&#8226;</center><i>Phyllis Nystrom is a market analyst with Country Hedging in St. Paul.</i>