3/6/18

Morning Bullet Points - 03/06/2018

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets spent most of the night trading lower.
  • KS wheat ratings yesterday afternoon improved slightly to 13% good-to-excellent, but are still terrible.  OK is rated 6% good-to-excellent (4 previously) and TX 10% (4% previously).
  • GASC tendered for wheat after the close yesterday with Russia winning the business.
  • South Korea tendered for 3 cargoes of optional origin corn.
  • FC Stone estimated 2018 US planted corn acres at 88.9 million and soybeans at 92 million, which would be pretty supportive corn and bearish soybeans.
  • USDA will update their balance sheets on Thursday with Brazil soybean production expected to be higher while Brazil corn, Argentine corn, and Argentine soybean production are all expected to be lower.
  • US corn exports are expected to be higher while US bean tables are not expected to change much.
  • Corn continues to trend higher with May resistance at 3.87 and support 3.75.
  • Soybeans also are trending higher with major resistance at 10.80 and support 10.30.
  • Wheat is seeing consolidation after last week’s big rally.  Support in the May at 5.00 and resistance at 5.15.
  • USDA reported 120,000 MT of soybeans to China for 2017/18.

WEATHER              

  • Argentina weather is dry for the next few days, and the 6-10 and 11-15 periods are probably not as wet as they were yesterday.
  • Brazil keeps getting scattered showers.
  • US HRW areas have rains in the far eastern areas, but other than that are dry for the next couple of weeks.

OUTLOOK

  • Corn continues its slow grind higher with producer selling offsetting fund buying.  The fund long is getting to be sizable with no significant corrections since the current rally started in early January.  With the report on Thursday, I think it is possible that we see some “profit-taking” ahead of the number, as the USDA will probably be slow to reduce the size of South American production as well as slow to increase US exports.  Regardless, there are a lot of new length (fund longs) in the market that have not been tested.  I look for a pullback soon.
  • Soybeans continue to see a lot of fund buying.  The market seems to be stalling out a bit with calendar spreads under some pressure.  The meal long is record large.  South American weather cannot get much more bearish, and the kicker (for me) is that in spite of lower Argentine production, Brazil is going to offset a good amount of their losses.  A pullback seems probable either before or after the report, and regardless of how bullish the Argentine production number may be.
  • Wheat saw the shorts blow out last week.  We got better crop ratings yesterday than a week ago.  A pullback to test support and make the buyers on the highs last week feel stupid seems probable.

Fun Fact of the Day:  According to the Food Safety and Inspection Service of the U.S. Department of Agriculture, eggs in the shell will maintain freshness for three to five weeks beyond the carton's stamped expiration date, provided that you keep them refrigerated at a temperature of about 40 degrees Fahrenheit.

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