12/18/17

Morning Bullet Points - 12/18/2017

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading higher this morning in a quiet trade.
  • Rains over the weekend hit Argentina, but the 6-10 and 11-15 dry out again.
  • Friday’s CFTC report showed managed funds as net sellers of 36,700 corn to leave them short 197,000 contracts, net sellers of 34,000 soybeans to reduce the net long to 20,000 contracts, and they were net sellers of 39,000 contracts of wheat to push the net short to a record 157,000.
  • Corn technically traded to a new low on Friday with support at 3.45 and resistance 3.55.
  • Soybeans technically are holding below major resistance at 9.80 with support below the market at 9.30.
  • Wheat technically pushed to new contract lows last week with support at 4.20 and resistance 4.30.
  • USDA reported 396,000 MT of soybeans to China for 2017/18.
  • USDA reported 168,000 MT of sorghum to China for 2017/18.

WEATHER    

  • Argentina saw good rains over the weekend but trends drier in the 6-15 period.
  • Brazil saw scattered rains over the weekend with that expected to continue over the next couple of weeks.
  • Overall, Argentina bought some time with the rains, but more will need to come.  Brazil continues to see generally favorable conditions.

OUTLOOK

  • Corn traded to a new low Friday as wheat is pulling it lower along with a lack of new weather problems in South America.  Carries are big, supplies are big, but the fund short is very big as well.  Farmer selling will likely slow as futures break, and there is typically some strength the last couple of weeks of December.  Some sort of a bounce seems probable.
  • Soybeans tumbled last week on a better weather outlook.  The market is still stuck within its range for the year.  Funds have a small spec long, which shouldn’t be a major factor for the market.  We had a big sale Friday and another this morning.  The market has dropped a long ways in a short period, so I would rather wait for a bounce before selling any physical soybeans.
  • Wheat should be supported by the massive fund short held in that market.  Look at low-risk ways to be long, such as bull spread with futures trading near full carry.

 

Fun Fact of the Day:  On December 10, 1906, Theodore Roosevelt became the first American to win a Nobel Prize. Roosevelt was awarded the Nobel Peace Prize for his work surrounding the Treaty of Portsmouth, which ended the Russo-Japanese War.

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