10/31/17

Morning Bullet Points - 10/31/2017

HAPPY HALLOWEEN—

MARKET HIGHLIGHTS

  • Markets trading mixed overnight with a…drum roll…quiet, directionless trade.  We could see some incremental volatility with month-end position squaring.
  • Crop progress yesterday showed corn harvest at 54% complete (53% expected) and soybean harvest 83% (83% expected).  Nothing too significant there with corn progress to make big increases in next week’s number.
  • Winter wheat was rated 52% good-to-excellent, which was less than expected.  Time for the annual reminder that there is zero correlation between wheat yields and crop ratings going into dormancy.
  • Harvest reports continue to show good corn yields and relatively worse soybean yields.
  • ADM profits on their earnings report this morning missed expectations due to poor margins.
  • Cash corn and soybean markets are soft-ish, which is to be expected during harvest.
  • Soybean deliveries were 50 contracts, which was well below expectations.
  • South American weather still looks to improve with Brazil rains expected to materialize this week.
  • Corn technically remains stuck in its range with support at 3.45 and overhead resistance at 3.50 and 3.55.
  • Soybeans technically are testing the bottom of the up-trending channel that they have been in since August.  A breach of that support could open the door for weakness to the next major support level near 9.30.
  • Wheat is testing support at the bottom of its range with support at 4.20 and resistance at 4.30.
  • USDA reported 100,000 MT of HRW to Iraq for 2017/18.

WEATHER

  • Brazil rains expected to materialize in the next few days to ease most of the moisture concerns.
  • Argentina is wetter than ideal.
  • US weather is open for the next couple of weeks.
  • Overall, as long as moisture concerns do not develop in Brazil, the market will probably be content.

OUTLOOK

  • Corn continues to see more range-trade with little reason to break out of this range unless soybeans make a move.  If corn is going to trade higher or lower, soybeans will be the leader.  If the market breaks out to the downside, there should be support at 3.30.  If the market breaks out to the upside, there will be resistance at 3.70.
  • Soybeans are set to make a relatively large move from here.  Longer term, I think the odds are decent that there will be enough of a production scare in North or South America to push things higher, but in the near-term, I would not be surprised to see a pullback to the 9.30’s to shake some of the speculative length out of the market.
  • Wheat is a quiet but look at new crop wheat-spreads if you feel compelled to buy something.

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