10/24/17

Morning Bullet Points - 10/24/2017

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading lower following yesterday’s wheat/corn led rallies.  Corn is down 1 cent, soybeans down 3.25 cents and wheat down 2.5 cents.
  • Weather not as good for Brazil today, but there are still rains expected next week.
  • Crop progress showed corn harvest 38% vs. 59% on average and soybean harvest 70% vs. 73% on average.
  • Rumors in the market yesterday that the US was going to sell wheat into the Middle East helped spark the rally.
  • Also noted was fund short covering + selling of soybean/buying of feed grains.
  • Corn technically bounced hard off support near the recent lows to return to the 3.50 area.  Resistance at 3.53 and support at 3.50.
  • Soybeans technically found support at the bottom of their recent up-trend near 9.80.  Resistance at 10.20.
  • Wheat technically put in an outside up day on the charts before hitting resistance at its 20 and 50 DMA’s.  Support at 4.30 and resistance at 4.40.

WEATHER         

  • Brazil rains not seen as extensive on the forecast today, but the 6-15 period still has some chances for needed rains.
  • Argentina expected to remain wet.
  • US weather is mostly dry for the next 10 days, which should allow harvest to somewhat catch up but still trailing 21% vs. the 5-year average.
  • Overall, Brazil remains the biggest question mark.

OUTLOOK

  • Corn had a good recovery off the lows yesterday and once again rejected prices sub-3.50.  There is no reason to think we get a major rally as the market is well supplied, but I do not think there is a lot of downside risk regardless of how much bigger the crop size grows.  There is good commercial buying under the market and farmers are not going to sell in the red.  I think a seasonal bounce off harvest lows has a 75% chance of taking the nearby contract to 3.70.
  • Soybeans were left behind on the rally yesterday, but they have been outperforming as of late.  The chart still looks bullish with key support in the 9.80 area holding so far.  With soybean yields less impressive than corn, I think there is potential to see more risk premium pumped into the market ahead of the SA growing season.  Nov. options expire on Friday, which probably limits both up and downside potential for the next few days.
  • Wheat bounced off the bottom of the range yesterday.  If the market can push above the 20 and 50 DMA’s, look for short covering to pick up.  

 

Disclaimers and Notices

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