2/5/18

Morning Bullet Points - 02/05/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets lower overnight following general market weakness and greater than expected buying from managed funds on the commitment of traders report.
  • USDA will be out Friday with their Feb. crop report.  South American production numbers will be a focus with bigger bean production expected in Brazil and corn/soybean production everywhere else lower.
  • Friday’s CFTC report showed managed funds as net buyers of 88,000 corn contracts to reduce the net short to 131,000, net buyers of 60,000 soybeans to reduce the short to 21,000, and net buyers of 50,000 wheat to reduce the net short to 96,000 contracts.
  • Corn technically is pulling back from highs early last week.  The short-term trend is higher, but a pullback to support at the 20 DMA looks possible.
  • Soybeans technically have given back much of the Argentina rally with March pushing through 20 DMA support overnight.  The short-term trend is now lower.
  • Wheat was too overbought last week and is now correcting.  A low looks to be in place, however, so look for good support in the low 4.30’s.
  • USDA reported 130,000 MT of corn to South Korea for 2017/18.
  • USDA reported 132,000 MT of soybeans to unknown for 2017/18.
  • USDA reported 66,000 MT of soybeans to unknown for 2018/19.

 

WEATHER  

  • Argentina has chances for rains later in the week, but returns to dry in the 11-15.
  • Brazil has chances for scattered showers over the next couple of weeks.
  • Light chances for showers across winter wheat areas, but still dry.

 

OUTLOOK

  • Corn had a good run to the upside with farmers selling into fund short covering.  The buying may have run out for a bit, but I believe a low is in place and that buyers can step in on a pull-back.  I am looking at 3.50-3.55 March as a buy area.
  • Beans broke support overnight, so probably have another 30-40 cents downside risk.  The fundamentals are weak unless the USDA shocks the market with incredibly low Argentine production (unlikely).  The low for the year was traded the day of the Jan. crop report, so we could be targeting that area before the report on Thursday.
  • Wheat rallied too far too fast.  Look for buyers to step in near 4.30.

 

Fun Fact of the Day:  The Eagles and Patriots combined for most net offensive yards in Super Bowl history last night.

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