1/31/18

Morning Bullet Points - 01/31/2018

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading lower overnight with soybeans under the most pressure, but all markets seeing inside days with the exception of wheat, which traded to a new high by 1/4 of a cent.
  • South American production still driving the headlines with Argentine crop estimates working lower.
  • Producer selling was noted in corn and soybeans from commercial sources during the rallies on Tuesday.  Cash corn and soybean markets were both under pressure.
  • Corn technically pushed above resistance yesterday at 3.60, which expands the range to 3.70 on the upside.  The higher trend has started, still remains in the 3.40-3.70 trading range.
  • Soybeans pushed to new highs yesterday with March finally able to close above 10.00.  The near-term trend is higher with support at 9.80 and resistance 10.20.
  • Wheat continues its moon shot with the market very overbought.  Support at 4.40 and resistance at 4.75.
  • USDA reported 145,000 MT of corn to “unknown” for 2017/18.

WEATHER

  • Argentina still dry for the next week and a half, but the 11-15 still has chances for rains.
  • Brazil has scattered showers for the next couple of weeks before seeing a drier trend in the 11-15.

OUTLOOK

  • We continue to see the markets climb higher on weather concerns for US wheat and South American corn/soybeans.
  • Corn has expanded the range from 3.45-3.55 to 3.40-3.70.  With the market sitting at 3.60, I think next sales targets should be set in the upper 3.70’s.  Considering the world supply/demand situation has not changed that much, I have no interest in chasing the market higher and buying futures right now.  However, I do think a pullback to the mid-3.50’s is a place to buy.  Bigger picture, supplies are still large and that is not likely to change anytime soon.
  • Soybeans are climbing higher on dryness in Argentina and an out of position spec. short position in the market.  There is still a big crop coming in Brazil, so I think the market may be getting a bit ahead of itself chasing the Argentina story.  Soybeans have the weakest fundamentals moving forward, so producers need to make sure they are taking advantage of the current strength and making sales.
  • Wheat is benefitting from terrible crop ratings and a spec. short that is out of position.  Considering the parabolic move is under way, producers should be looking to sell, and anyone that has caught the move higher via long positions should be lightening up.

Fun Fact of the Day:  You will be able to see a rare, super blue blood moon today.  Not only will it be the second full moon this month, but it will also be a super moon during a total lunar eclipse.  The first time all three events (super moon, blue moon, lunar eclipse) occurred simultaneously since 1866.

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