1/22/18

Morning Bullet Points - 01/22/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading higher, led by strength in the soy complex.
  • South American weather has dryness in Argentina through early February.
  • Argentina soy crush rates have some concerned over meal supplies.
  • Friday’s commitment of traders report showed managed funds as net sellers of 4,300 corn to push the net short out to 226,000, they sold 11,000 soybeans to push the net short out to 103,000, and they sold 14,000 wheat to push the net short out to 143,000.
  • February options expire Friday with the biggest corn open interest at 3.50, soybeans 9.80, and wheat 4.20.
  • ADM reportedly trying to buy Bunge.
  • Corn technically bumping into the upper end of its range with big sell orders resting at 3.55 and moving average resistance at 3.58.  Trend remains sideways for now.
  • Soybeans continue to see a bounce off the lows with March pushing through 9.80 resistance and moving average resistance at 9.83 overnight.
  • Wheat is bumping into moving average resistance at 4.27 and support at 4.20.  Trend is sideways.

 

WEATHER

  • Brazil is dry in the northeast early this week, but then sees scattered showers to keep everything in good shape.
  • Argentina looks dry for the next couple of weeks, which will lead to rebuilding of moisture deficits.
  • US plains have some chances for rains, but no widespread events either.

 

OUTLOOK

  • Corn is grinding higher with farmer selling slowing rallies.
  • The fundamental outlook is unchanged, so with the market hitting the upper end of the range, this makes sense to look for spots to sell.  I still have a hard time thinking corn makes a big move higher or lower from here in the next couple of months.
  • Soybeans are reacting to the dryness in Argentina as well as inflicting some pain on the larger than expected fund short.  Having said that, world bean supplies remain large and the market is getting to some resistance levels where I think it makes sense to consider sales in that market as well.
  • Wheat still has the potential bottom on the charts, but currently is a reluctant follower of the corn/soybean markets higher.

 

Fun Fact of the Day:  The hieroglyphic system used in ancient Egypt had between 700 and 800 basic symbols, called glyphs. This number grew in the last centuries of ancient Egyptian civilization, because of an increased interest in writing religious texts.

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