3/12/18

Morning Bullet Points - 03/12/2018

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading mostly lower overnight following the weakness on Friday and greater than expected buying reported by the managed funds on Friday’s CFTC report.
  • Weather is little changed with Argentina past the point of no return for a lot of their corn/soybean crop.
  • Friday’s CFTC report showed managed funds as net buyers of 104,000 corn to push the net long to 163,000, buyers of 37,000 soybeans to push the net long to 183,000 contracts, and buyers of 28,000 wheat to reduce the net short to 32,000.
  • Plenty of focus remains on the Trump tariffs and what effect there may be on soybeans.
  • Corn technically in correction mode with support at 3.80 and resistance 3.95.  The higher trend is still in place, but room to pullback in the near term.
  • Soybeans technically in correction mode with the overnight low for May near major support at 10.30.  Next support below there is 9.80.  Resistance above the market at 10.80.
  • Wheat technically correcting as well with support in May at 4.80 and resistance 5.00.
  • USDA reported 107,700 MT of corn to Japan for 2017/18 marketing year.
  • USDA reported 254,800 MT of corn to unknown for 2017/18.

WEATHER  

  • Argentina had light rains over the weekend, but large growing areas were short-changed.
  • Light chances for rains are seen this week, which will keep large areas dry with crop damage seen.
  • Brazil has a drier outlook.
  • US wheat areas still look dry with KS and OK stressed.

OUTLOOK

  • The corn market has a good story moving forward with US and world stocks headed lower.  The market has seen a lot of fund buying, so I think we will see those positions tested, but longer term, there is good upside potential for corn.  Buy a dip to the 3.80 area basis May.
  • Soybeans are in a little different situation, although the expectations for lower world soybean supplies give the market potential later this year.  “The funds” are long too many soybeans and too much meal, so look for the market to clean them out. 
  • Wheat is in correction mode too.  Wheat supplies are large, as they have been forever.  Nevertheless, the US crop is headed lower.  Look for buyers to step in if wheat drops another 5 cents.

Fun Fact of the Day:  For more than a half-century Montana would be known as the Treasure State because of its status as the country's foremost producer of metallic treasure--gold, silver, and, most importantly, copper. 

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