11/27/17

Morning Bullet Points - 11/27/2017

GOOD MORNING –

 

MARKET HIGHLIGHTS

  • Markets opened up Friday on Thanksgiving week to finish down. Corn dropped 3 cents, soybeans dropped 4 cents.
  • Markets negative this morning on better than expected weather for South America. Corn is currently down a cent, soybeans unchanged.
  • Argentina had more rain than expected last week, with rains relieving some dry areas in Brazil as well.
  • Weather models disagree on short term SA weather. The US model projects a dry SA in the upcoming week with the Euro model showing increased rain forecasts.
  • Markets are concerned about US corn exports, with high stocks worldwide the current thinking is that the USDA might have overestimated total exports barring a severe SA drought.
  • Corn futures still maintain a massive short position, giving momentum to any bulls who might be looking for short term gains.
  • Ethanol continues at a record production, but isn’t likely sustainable as they outpace USDA requirements.

WEATHER

  • Argentina is projected to receive limited rains by the US model. With corn pollinating Dec-Jan, a continued trend might negatively impact yield, but not enough to seriously alter the global stocks.
  • Midwest temps look to be far above average over the next 10 days. Rainfall looks to be mostly average providing good conditions to the few farmers looking to finish.
  • Brazil remains in great shape, with no significant areas bearing any issues and upcoming weather looking benign.

OVERALL

  • March corn has reset itself technically to a 3.50/3.60 trading range that we had a few weeks back on the December. Downside risk is minimal with the current massive shorts, but global stocks are so high that any rallies are likely capped at 20 cents max.
  • The earlier soybean rally has stalled and now remains range bound. Long term direction can go either way depending on SA weather. If significant rallies do emerge, expect soybeans to take corn along for the ride.
  • Wheat remains rather directionless to negative.

 

Fun Fact of the Day: Upside-down rainbows, although unusual, do exist. They have nothing to do with rain, and in fact form when sunlight shines through ice crystals high in the atmosphere and form what many call a “smile rainbow” or “smile-in-the-sky.”

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