1/24/18

Morning Bullet Points - 01/24/2018

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading higher overnight with the US Dollar weakness/general commodity strength helping prices
  • No major changes to the South American weather with dryness persisting in Argentina.
  • Corn open interest sharply higher on Tuesday with good buying interest showing up sub-3.50.
  • Mato Grosso soybean harvest is matching last year’s records so far.
  • Informa estimated corn acres at 89.179 million (90.2 last year) and soybeans 91.197 (90.1 last year).
  • Corn technically dropped below its 50 DMA yesterday, but is firmly back above this morning.  Next moving average resistance at 3.57 and support at 3.50.
  • Soybeans technically made a new recent high yesterday with the uptrend potentially starting.  Support at 9.82 and 9.80.  Resistance at 10.00.
  • Wheat technically remains range-bound with resistance at 4.27 and support 4.20.
  • USDA reported 132,000 of meal to the Philippines for 2017/18.
  • USDA reported 125,000 of soybeans to unknown for 2017/18.

WEATHER   

  • Brazil expected to see scattered showers over the next couple of weeks.
  • Argentina is dry as we get into February.

OUTLOOK

  • Corn probed below 3.50 as well as some key technical levels yesterday before bouncing on the close.  Open interest suggests new players entering the market.  Corn is cheap relative to every commodity except for wheat.  I think we could be starting to see some outside interest in corn.  Supplies are large, so if we do get a rally in futures, basis will probably widen significantly.
  • Soybeans have already had a pretty big bounce off their lows.  US and world supplies are still large.  For now, I think producers should be willing to put on downside protection on the current rally.
  • Wheat still has the potential double bottom in place.  Funds are loaded up to the short side.  The US Dollar is headed lower.  I like the risk/reward of buying wheat with stops under the recent lows.

Fun Fact of the Day:  90 percent of the world's population lives in the Northern Hemisphere.

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