1/8/18

Morning Bullet Points - 01/08/2018

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading mostly lower in a quiet trade.
  • All eyes looking at the January crop report that will be out at 11 am CST on Friday.
  • Expectations, however, are for more of the same, which is that in spite of huge world demand for corn, beans, and wheat, supplies are more than enough to meet that demand.
  • Friday's CFTC report showed managed funds as net buyers of 8,000 corn to reduce the net short to 198,000, they sold 16,000 soybeans to increase the net short to 85,500 and bought 17,000 wheat to reduce the net short to 128,000.
  • Algeria bought 555,000 MT of wheat.
  • South Korea bought 60,000 MT of optional origin corn.
  • Corn technically remains range-bound with 3.50 acting as a magnet.  With Friday's report looming, it likely stays in that range.
  • Soybeans technically are consolidating after the big drop from the early December highs.  The short-term trend is lower.
  • Wheat is still range-bound as well with the market failing to push through moving average resistance last week.
  • USDA reported 120,000 MT of soybeans to Egypt.
  • USDA reported 132,000 MT of soybeans to unknown.
  • USDA reported 102,000 MT of corn to Mexico.

 WEATHER

  • Brazil caught rains over the weekend but will be on the dry side until next week.
  • Argentine has chances of showers late this week and good chances in the 11-15 period.
  • US plains wheat areas have chances for rains this week.
  • Overall, South America still looks ok and the dry US wheat areas may see some relief this week.

OUTLOOK

  • Corn looks for a quiet week of trade going into the numbers on Friday.  We will get pre-report estimates early this week, but the numbers that matter the most (the size of the pile at the end of the marketing year) is still likely to be more than adequate.  Look for the range-bound trade to continue for the next few months with farmer selling likely to pick up on rallies, and selling interest to wane at the bottom of the range.
  • With the ideas of the size of the Brazil crop and the lack of exports the US has been doing, it is hard to paint a friendly picture for the soybeans.  Soybeans have the greatest potential for a large jump in year over year stocks, which I think means soybeans will underperform corn/wheat moving forward.  Sell rallies.
  • Wheat still looks to me like it is trying to end its multi-year downtrend.  Fundamentally, there is not much reason to rally, but I do not think there is a significant amount of downside here either.

Fun Fact of the Day:  According to the most recent United Nations estimates, the human population of the world is expected to reach 8 billion people in the spring of 2024.

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