11/16/17

Morning Bullet Points - 11/16/2017

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading mixed in a choppy night trade……I sound like a broken record.
  • Export sales out this morning for wheat 489,3000 MT (350-550 expected), corn 949,500 MT (1,200-1,700), soybeans 1,104,800 MT(1,100-1,500), meal 163,100 MT (125-350), and oil 2,700 MT (14-40).
  • Disappointing corn and soybean sales while wheat was at least at the upper end of expectations.
  • Cash corn markets showing some firmness while soybeans are pretty quiet as we see some cross country moves.
  • Corn open interest is at 10-year highs. We will certainly monitor this moving forward as it might cause some parabolic moves on the unwind.
  • Chinese soybean imports have been slow due to concerns over GMO beans.
  • 164.2 mbu on the NOPA crush yesterday vs. expectations for 164.5 mbu.
  • Corn technically is in its lower trend with support at 3.30 and resistance 3.40.
  • Beans have rolled over with support at 9.30 and resistance 9.80.
  • Wheat remains range-bound with support at 4.20 and resistance 4.30.

WEATHER      

  • Scattered rains are seen over the next couple of weeks in Brazil to limit any concerns in that country.
  • Argentina is dry with chances for showers late in the 6-10 and 11-15.

OUTLOOK

  • The exports this morning were disappointing, but that has not necessarily led to lower price movements that one would expect in the past.
  • Corn demand remains robust, but for now, we have plenty of supply.  I am trying to wrap my head around the significance of record corn open interest.  The huge carries in the corn market are probably part of the reason for the increased positions.  Regardless, corn still looks to me like it is on course to test support at 3.30.
  • Soybeans had a sizable bounce yesterday to recover some of the losses from earlier in the week.  Exports disappointed today, but as was noted above, that has not necessarily equated to lower prices in the past.  South America is in good shape, but there is a lot of growing season left.  Soybeans are still relatively expensive to corn/wheat, and that is the only market “the funds” are long.  For those reasons, I think there is potential to see more weakness in the near-term.
  • Wheat is a follower of the corn and soybeans.

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