4/6/18

Morning Bullet Points - 04/06/2018

GOOD MORNING—

MARKET HIGHLIGHTS

  • Markets trading lower most of the night as the latest plan for tariffs was announced just before the overnight session started last night.
  • Monthly jobs report this morning disappointed at +103k vs. expectations for 185k.
  • Buenos Aires Cereals Exchange lowered their Argentine bean production estimate to 38mmt (USDA 47).
  • Soybean crush margins remain very strong.
  • Brazil bean bids at their export locations are through the roof.
  • Corn technically bounced off moving average support overnight near 3.83 with overhead resistance at 3.93.  The trend is higher with recent consolidation pushing weak hands out.
  • Soybeans technically are within the range that we have seen for the last few years with support below 10.20 and moving average resistance at 10.30.  If 10.30 were to be breached, the next resistance would be 10.80.
  • Wheat technically is working higher after building the base last winter.  Support at 4.60 and 4.55.  Resistance at 4.80.
  • USDA reported 327,00 MT of soybeans to unknown for 2017/18.
  • USDA reported 131,000 MT of soybeans to unknown for 2018/19.
  • USDA reported 20,000 MT of soybean oil to unknown for 2017/18.
  • USDA reported 130,000 MT of soybeans to Mexico.
  • USDA reported 100,000 MT of corn to Egypt for 2017/18.

WEATHER

  • US winter wheat remains dry for the next two weeks with freeze damage possible this weekend.
  • The Midwest is wet in the 6-10, which may limit early start of fieldwork.
  • South America has dryness in S. Brazil double-crop corn areas.
  • Argentina is starting to catch rains as they try to harvest their drought-damaged crops.

OUTLOOK

  • The market continues its roller coaster ride with tariff headlines not bullish for Ag commodities.
  • Once the dust settles, I think the focus will revert to the declining world supplies of corn/beans, and the fact that we need to expand the total bean/corn acre number from what the USDA said at the end of March…and the clock is ticking on that.
  • Managed funds remain heavily long the corn and beans, but they have had a good clean out this week.
  • The outlook for corn is supportive.  Look for pullbacks to be supported and hold off from selling.
  • Soybeans will continue to be impacted by tariff talks, but with the Argentine crop failure, usage is set to outpace production globally, which I think means downside price risk is limited.
  • Wheat continues to look good technically, and the US HRW crop has problems.  Look for pullbacks to find buyers.

Fun Fact of the Day:  The tree of Coffea arabica will grow fruits after three to five years, and will produce for about 50 to 60 years (although up to 100 years is possible). 

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