2/28/18

Morning Bullet Points - 02/28/2018

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading higher overnight and even firmer out of the gates this morning with corn, soybeans, wheat, and meal all trading at new highs to finish out the month of February.
  • Argentine soybean production estimates continuing to work lower with some privates now dropping as low as 40-45 MMT (USDA 54 MMT last month).
  • 25 corn contracts were delivered against the March contract, 81 KC wheat, 101 soybeans, and 0 Chicago wheat.
  • The change in ownership from producers to speculators continues with the large offer in new crop corn at 4.00 taken out overnight.
  • Revenue insurance levels are on pace to be set at 3.96 and 10.16.
  • Corn technically continues to trend higher with the market bumping into major resistance at 4.00 Dec.  Support at 3.90 with next upside resistance near 4.20.
  • Soybeans technically trending higher with next major resistance at 10.80 basis May.  Support below the market at 10.30.
  • Wheat technically trending higher after a healthy correction.  Support for May at 4.65 and resistance 4.85.

WEATHER 

  • Argentina is seeing some rains in western areas, but driest spots remain dry and stressed.  There are chances for western areas over the next couple of weeks, but the problem areas are dry.
  • Brazil sees a little drier weather in the 6-10 and 11-15, which will help harvest pick up.
  • US winter wheat areas are dry the next couple weeks.

OUTLOOK

  • Corn continues to grind higher.  The market has “bought” all the acres it is going to buy with the insurance price as the price discovery period is over.  3.96 makes me think acres will be pretty steady year-on-year as lower input costs make that profitable for most producers.  There will likely be plenty of hedge pressure with Dec. at 4.00 and above, so if you were planning on selling 4.00 new crop corn, make sure you are getting it done.
  • Soybeans continue to find buyers related to the Argentine crop problems.  There is resistance in July meal near 400 (392.5 currently) and 10.80 May beans (10.56 currently).  Those levels seem a long ways off, but look how quickly we have moved like we have. 
  • Wheat started its next leg higher overnight.
  • All three markets are going to be making new highs going into the new month, which puts us at risk for bearish reversals.  Keep at the task at hand.

Fun Fact of the Day:  The name “hamburger” actually came from Hamburg, the second largest city in Germany. In the late 1700s, sailors who traveled between Hamburg and New York City often ate hard slabs of salted minced beef, which they called “Hamburg steak.”

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