3/19/18

Morning Bullet Points - 03/19/2018

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading lower overnight with soybeans and KC wheat taking the most punishment.
  • Friday’s commitment of traders report showed managed funds as net buyers of 69,000 contracts of corn to push the net long out to 233,000, buyers of 25,000 soybeans to push the net long out to 208,000, and net sellers of 3,000 wheat to push the net short to 35,500.  The buying in corn and soybeans was greater than expected.
  • South American weather over the weekend was near expected while rains are looking better for US HRW areas.
  • South American double-crop corn planting nearing completion.
  • Big exports continue out of Brazil with record bean loadings underway.
  • Corn technically in correction mode with support for the May contract at 3.75 and 3.72.  The up-trend is still in place.
  • Soybeans technically in correction mode as well.  Support for May is at 10.30 and 9.80.  Resistance is at 10.50 and 10.80.
  • Wheat technically correcting further as well.  Moving average support at 4.57 and resistance at 4.66.
  • USDA reported 115,000 MT of corn to unknown for 2017/18.
  • USDA reported 206,000 MT of corn to Japan for 2018/19.

WEATHER       

  • Argentina rains over the weekend not as good as expected.  The outlook is dry for the next couple of weeks.
  • Brazil has scattered rains over the next couple of weeks.
  • US wheat areas are catching some rains now with chances in the 6-10.  The drier outlook returns in the 11-15.

OUTLOOK

  • Corn made a strong push higher in Feb. and early March as the market came to the realization that South American production was going to be much less than expected, US demand was strong, and that US corn acres were likely going to shrink.  Speculators loaded up on longs while producers used the rally to sell massive amounts of old crop corn.  The market appears to have run out of new buyers for the time being, but the bullish narrative moving forward has not changed, in my opinion.  Once we can shake some of the new speculative length out, look for the market to resume the up-trend.  Get ready to re-own recent corn sales on this pullback.
  • Soybeans also had a big rally to start the year on speculative buying and ideas that the Argentine crop would be very short.  That appears to be the case, but the record crop in Brazil is going to limit some of the impact of the short Argentine crop.  Longer term, soybeans do not have as good of a story as corn, but if corn is going higher, beans will likely follow along.  Look for the market to pullback in the near-term, but be ready to re-own recent sales if we can drop another 40-50 cents.
  • Wheat has been leading the correction to the downside, and now we are getting some bearish weather.  I still believe a base has been built and that wheat can be bought now.

Fun Fact of the Day:  For the first time in NCAA men’s basketball tournament history a #16 seed upset a #1 seed (overall #1 at that).

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