2/12/18

Morning Bullet Points - 02/12/2017

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading higher overnight with disappointing rains in Argentina supporting the soy complex.
  • Friday’s COT report showed managed funds as net buyers of 48,000 contracts of corn to reduce the net short to 82,000.  They bought 12,000 soybeans to reduce the net short to 10,000, and they bought 13,000 wheat to reduce the net short to 83,000.
  • Chinese New Year starts this week, which may lead to a lack of trade in soybeans.
  • Corn technically trading toward the middle of last week’s range as we consolidate at the upper end of the recent range.  The trend is higher, but the market is overbought and due for a correction.
  • Soybeans technically continue to see a wide choppy range from 9.80 to 10.00.  A bigger move out of this consolidation range looks likely.
  • Wheat is similar to corn with a higher trend, t seeing consolidation in the middle of last week’s range.
  • USDA reported net cancellations of 455,000 MT of soybeans to China for 2017/18.
  • USDA reported 314,000 MT of soybeans to unknown with 198,000 MT for 2017/18 and 116,000 MT for 2018/19.

WEATHER

  • Disappointing rains over the weekend in Argentina.
  • Dry in Argentina for the next week before chances return in the 6-10 and 11-15 periods.
  • Brazil continues to catch scattered rains over the next two weeks.
  • US HRW areas in need of a drink.  There are rains in the 6-10 and 11-15 period, but right now they look to track a little too far east to hit the driest areas.

OUTLOOK

  • Corn is starting the week off firm after weakness late last week.  The market is at the upper end of the trading range, and the fundamentals have not changed all that much.  Supplies are large enough to meet demand, but the US is exporting a lot of corn and world supplies are being drawn down.  I look for a pullback as farmer selling is likely to overwhelm fund buying in the near term, but long term, I think the trend is higher.  Buy a pullback to the mid-3.50’s.
  • Soybeans pushed to the top of the recent range overnight, but then had the cancellation announced this morning.  That probably puts some pressure on the market this morning.  Argentine production is headed lower, but supplies will be adequate with the big Brazil crop.  We have had some sizable moves in this consolidation zone, so we could see a big move if we ever break out of the range…potentially 10.30 to the upside and 9.30 to the downside.
  • Wheat continues to find buyers on pullbacks and “the funds” are still short a lot.  Look for sideways to higher with buyers stepping in on dips.

Fun Fact of the Day:  Andrew Jackson, born on March 15, 1767, was the first President to be born in a log cabin. Martin Van Buren, born on December 5, 1782, was the first President to be born a citizen of the United States. Previous Presidents had been born before the American Revolution, and thus were born British subjects

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