2/8/18

Morning Bullet Points - 02/08/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed overnight as we head into this morning’s USDA numbers.
  • Export sales this morning for wheat were 393,400 MT (200-500 expected), corn 1,769,000 MT (1,300-1,800), soybeans 743,200 MT (400-700),
  • Corn, soybeans, and wheat all within expectations.  Product sales were at the low end of estimates, so the Argentine concerns may be getting priced in somewhat.
  • CONAB was out this morning and lowered Brazil corn production to 88 MMT (USDA 95 last month). Bean production was increased to 111.55 (USDA 110 last month).
  • The weekly drought monitor showed dryness expanding slightly with much of the southwest US in drought now.
  • Corn technically is making new highs overnight with next upside resistance at 3.69-3.70.  The short-term trend is higher, but the market is pretty overbought.
  • Soybeans technically are mid-range with March hovering near 9.80.
  • Wheat pushed to new highs yesterday.  A base has been built and the trend is higher.  Resistance at 4.70 and support 4.40.

 

WEATHER

  • Argentina still has chances for rains in the next couple of days.  Better chances for rains there are seen in the 11-15 period.
  • Brazil has scattered showers over the next couple of weeks.
  • US wheat areas still have chances for rains in the 6-10 period.

 

OUTLOOK

  • Corn keeps grinding higher on lower SA production, and fund short covering.  Supplies are still more than adequate and have rallied coming into the report, which sets us up for a lower reversal on a neutral or bearish report.  Longer term, I think a pullback would be a buying opportunity as world supplies are still set to shrink year over year, and outside money seems to have some interest in commodities, regardless of the underlying fundamentals.
  • Soybeans have traded a wide range over the last couple of weeks.  With a big Brazil crop on the way, world supplies are still growing.  Soybeans have the weakest fundamentals moving forward and have traded accordingly.  Any bullish reaction to the numbers today should probably be viewed as a selling opportunity.
  • Wheat looks to have established a base and is working higher.  The market is a little overbought, so I’d rather wait for a pull-back to buy, but longer term the market looks like it can go higher.

 

 

Fun Fact of the Day: Hippos cannot sweat, but they do produce a red fluid that acts as an antibiotic, sunscreen, and skin moisturizer. Which means the hippos will at times appear as if they are sweating blood.

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