3/7/18

Morning Bullet Points - 03/07/2018

        GOOD MORNING—        

 

MARKET HIGHLIGHTS

  • Markets mostly lower overnight with turmoil in the equity markets somewhat spilling into the grains.
  • Mixed ideas on South American weather with chances for rain in Argentina in the 6-10 and 11-15.
  • USDA report out at 11am CST tomorrow expected to show sizable drops in Argentine corn/soybean production and Brazil corn production. Brazil soybeans expected to be higher.  Talk that the recent price increase may add some second crop corn acres in Brazil.
  • Calendar spreads in beans under pressure yesterday, which is usually a bearish input.
  • Cash markets mixed with farmers continuing to move grain on the current rallies.
  • Corn technically continues to trend higher.  Next upside resistance for the May contract is 4.00.  Support is near 3.75.
  • Soybeans technically are trending higher as well with some consolidation seen near current prices.  Major resistance in the May at 10.80 and support at 10.30.
  • Wheat technically is in correction mode after last week’s blow up.  Support at 5.00 and resistance 5.20.

 

WEATHER             

  • Argentina has chances for rain in the 6-10 and 11-15, but confidence is low.
  • Brazil to see scattered showers, but less than what we have been seeing, which will allow harvest and planting of double crop corn to pick up.
  • Hard wheat areas in the US are mostly dry for the next two weeks.

 

OUTLOOK

  • Corn continues to grind higher as the market tries to “buy” acres and put in risk premium ahead of the US growing season.  Corn has the best fundamentals to justify higher prices moving forward, but we are overdue for a correction with a USDA report out tomorrow.  That sets us up well for either profit taking ahead of the numbers or a buy the rumor/sell the fact trade after the report tomorrow if it is bullish.  Regardless, longer term, I think we can work higher.
  • Soybeans had a big sell off in the spreads yesterday.  Brazil is still on pace to raise a big bean crop.  The market has clearly priced in reduced production in Argentina.  Meal has been taking a breather.  I think soybeans have quite a bit of downside risk with a healthy clean out of speculative longs needed before the move higher can resume.
  • Wheat needs to correct more after blowing out the shorts last week.

 

Fun Fact of the Day: Quite fittingly, the first CD made in the United States for commercial release was Bruce Springsteen's 1984 album, "Born in the U.S.A."

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