11/20/17

Morning Bullet Points - 11/20/2017

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading mostly lower this morning in a quiet trade that is likely to get quieter as we shift into holiday mode.
  • December options will expire Friday in the shortened session.  Largest corn put OI (open interest) is the $3.40 strike with 34,000 contracts while the $3.50 calls are 24k,000 and $3.60 calls have 35,000 contracts.  Nothing jumps out in the soy complex.  Wheat has the largest OI at the $4.30 puts and $4.50 calls.
  • Friday’s CFTC report showed managed funds as net sellers of 25,000 contracts of corn to push the fund short to a record 230,000.  They sold 24,000 soybeans to reduce the net long to 22,000.  They net bought 17,000 wheat to reduce the net short to 108,000.
  • Cash corn markets continue to be firm.
  • Rumors swirling in the market that China is booking US corn out of the PNW.
  • Corn technically recovered back into the $3.40-$3.50 range we had seen much of the last few months.  The market is correcting from oversold conditions with support at $3.40 and resistance at $3.50.
  • Soybeans technically recovered off last week’s lows and are in the $9.60-$10.00 range we’ve seen since early September.
  • Wheat remains range-bound with support at 4.20 and resistance 4.30.

WEATHER              

  • Brazil caught some rains over the weekend with more expected in the next couple of weeks.
  • Argentina is starting to be a bit of a concern due to dryness with the northern half of growing areas needing a drink.

OUTLOOK

  • The corn market finally ran out of sellers on Friday, recovering to finish last week unchanged.  I think this was a strong rejection of prices sub-$3.40 as that is where the biggest put OI sits.  I think that could have been the start of a short-covering, post-harvest bounce with the potential to get to $3.65 in the nearby contract.  Cash markets likely soften on that type of rally, as cash corn will move. 
  • Soybeans also had a big move higher to finish the week.  Some dryness concerns are growing in Argentina, and with the US farmer heavily sold, there is not going to be as much hedge pressure on rallies.  Having said that, the cash bean market is still very weak, so expecting the futures rally to continue will depend on weather problems in South America.
  • Wheat continues to see a sideways trade.  Fundamental news is slow.

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