10/25/17

Morning Bullet Points - 10/25/2017

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading higher overnight with soybeans trying to catch up with the gains from the last two days in corn/wheat.
  • Nov. options expire Friday with 9.60 puts and 10.00 calls the biggest OI strikes for soybeans.
  • Yield reports continue to show good corn yields while soybean yields are starting to disappoint as harvest heads into the final stretch.
  • Corn technically is trading above its 50 DMA this morning for the first time since July 25th.  Support at 3.53 and next major resistance well above the market at 3.70.
  • Soybeans technically were able to hold above support at the bottom of their recent channel as well as key support near 9.80.  Overhead resistance at 10.30.
  • Wheat remains range-bound in a very similar situation as corn.  Support at 4.30 and resistance at 4.40.

WEATHER        

  • Brazil rains expected to expand over the next couple of weeks with heavy rains seen early next week in central Brazil.
  • Argentina continues to catch rain to limit planting progress.
  • Dry weather is seen in the Midwest to let harvest progress.
  • Overall, no major concerns as long as Brazil catches rains over the next couple of weeks.

OUTLOOK

  • As has been discussed, corn does not have a story on its own.  Yields continue to be big and carry in the market suggest we have plenty.  However, if soybeans can move higher, it will likely spill into corn, and although farmer selling will show up to slow rallies, “the funds” are vulnerable to short covering.  I think there is upside to the 3.70 area as the market bounces from harvest lows.
  • Soybeans look good on the charts with a successful test of support so far this week.  Yields are starting to disappoint, and a 1 BPA change in national yield has a pretty major impact on ending stocks.  If the rains forecast for Brazil does not materialize, I think there is a good amount of room for soybeans to run to the upside.  Farmers have been aggressive sellers during harvest and once the soybeans are out of the producer’s hands (generally speaking) is when markets have the best potential.  Look for buyers to step in on pullbacks.
  • Wheat is a follower of corn.

 

Fun Fact of the Day:  Istanbul, the largest city in Turkey, is the best-known example of a city in two different continents. Almost all of it lies in Asia, but a small portion extends into Europe. 

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