1/23/18

Morning Bullet Points - 01/23/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed overnight with soybeans adding to the recent gains while corn/wheat traded small losses.
  • Mixed production ideas being talked about in South America with Brazil soybean production edging higher (114 MMT?) and Argentina edging lower (52 MMT?).
  • February opoptionsxpiration Friday with 3.50, 9.80, and 4.20 the big strikes.
  • Cash markets mixed yesterday.
  • South American producer selling lighter than expected on yesterday’s rally.
  • Corn open interest sharply higher yesterday as farmer selling was likely a feature at the top of the trading range.
  • Managed funds still holding large shorts in corn, beans, and wheat in spite of the recent price appreciation.
  • Corn technically failed to hold above the 50 DMA near 3.52 and is testing support near the 20 DMA this morning.  Trend is sideways.
  • Beans technically pushed through the 50 DMA yesterday and are holding above this morning.  Resistance at 10.00 and support 9.80.
  • Wheat technically is within its recent range with support at 4.10 and resistance 3.30.  The potential double bottom is still in place.
  • USDA reported 256,000 MT of corn sold to unknown on the daily report.

WEATHER

  • Brazil dry in northeastern areas currently, but scattered showers are expected to hit all growing areas by the end of next week.
  • Argentina remains pretty dry over the next couple weeks with crop losses likely.
  • US plains are dry for the next couple of weeks.

OUTLOOK

  • Corn failed at the top of the range yesterday with open interest climbing higher on what was likely farmer hedge pressure.  The market is lacking of the catalyst to push out of this range for now.  Longer term, we might be able to break out, but for now, buyers are likely to step in on pullbacks and sellers are likely to step in on rallies.  Look for March to seek out the 3.50 level for Friday’s expiration.
  • Soybeans added value yesterday and overnight with concerns over rains in Argentina.  On the other side, Brazil is in good shape.  World supplies are likely still growing, so I guess I still think the current move needs to be viewed as a selling opportunity.  Take advantage of fund short-covering to make sales.
  • Wheat is just sitting near the middle of its recent range.  I think a bottom is in place, but there is probably no reason to be overly bullish or bearish right now.

Fun Fact of the Day: There are 118 ridges around the edge of a Roosevelt dime, 119 ridges around the edge of a quarter, and 150 ridges around the edge of a Kennedy half dollar.

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