10/9/17

Morning Bullet Points - 10/09/2017

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading mostly lower this morning after seeing a mixed overnight trade.
  • USDA will be out on Thursday with updated supply and demand, which could lead to a directionless trade the next few days.  Estimates will be out later today with small production increases expected.
  • Crop progress this afternoon will be delayed for Columbus Day.
  • Friday’s commitment of traders report was lacking major surprises with funds net sellers of 9.7k corn to push the short to 143k, they sold 500 beans to reduce the net long to 27.7k, and were net buyers of 8k wheat to reduce the net short to 56k.
  • SAFRAS estimated the 2017/18 Brazil bean crop at 114.7mmt vs. the USDA currently at 107mmt.
  • Corn ran into resistance again overnight at its 20 DMA but is still struggling to make new lows as well.
  • Soybeans technically continue to make higher lows, but struggled near resistance at 9.80 last night.  The market is a little overbought after the late-week gains.
  • Wheat hit resistance overnight at the 20 DMA and pulled back.  The trend is higher and the market is oversold on the current pullback.

WEATHER           

  • Weekend rains slowed planting in Brazil but brought needed moisture.  Center West Brazil has chances for rains in the 11-15.
  • Argentina is expected to see some drying over the next couple of weeks.
  • Rains in the Midwest expected to slow harvest the next couple of days with more chances in the 6-10 and 11-15 period.  Probably not going to affect the crop size, but will slow harvest.

OUTLOOK

  • A quiet start for what is likely to be a quiet week leading into the report on Thursday.
  • Yields are good enough to say we will have enough corn to meet demand this year.  There are still huge carries in the market, which until some of the carry starts to come out, flat price moves will probably continue to be small.
  • Soybeans finished last week strong, and technically the charts are hinting at more upside.  However, what soybeans do over the next few months will be dependent upon the South American crop outlook.  Currently, there are some problems with too dry in Brazil and too wet in Argentina.  Look for choppy trade the next few days as there is probably no reason to see a big move ahead of the October report.  Longer term, the world is walking a fine line with supply meeting demand.  If the SA crop comes up short, I do not think there is much to stop beans from running to $12 while 9.00-9.30 likely supports the market if they can raise another record crop down there.
  • Wheat had a decent move off the lows in August but has spent the last couple of weeks correcting.  Look for buyers to start to step in again.

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