4/16/18

Morning Bullet Points - 04/16/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed overnight with KC wheat under the most pressure and soybeans seeing the best bid.
  • Moisture outlook for HRW areas improved with good rains expected in the 6-10.
  • Friday’s CFTC report showed managed funds as net buyers of 34,700 contracts of corn to push the net long out to 175,000, net sellers of 5,000 soybeans to reduce the net long to 176,000, and net buyers of 19,000 wheat to reduce the net short to 54,000.  That time period covered both trade war overnight sell-offs.
  • NOPA crush will be out today and is expected to be 168.2.
  • Weekly crop progress this afternoon will show corn planting behind the average pace.
  • Corn technically is pulling back after bumping into resistance near contract highs last week.  The longer-term trend is still higher with moving average support just below the market.
  • Soybeans technically pulled back late last week, but are still trading near contract highs.  We are still stuck in the range that we have seen for the last several years with a move above 10.80 in the nearby contract needed to signal a breakout.
  • Wheat gapped open lower last night with support at 4.63 and resistance 4.75.

 

WEATHER   

  • US plains are wet the next 10 days.
  • The Midwest caught lots of rain over the weekend with more expected the next two weeks.  Planting will be slow to get started, but it’s still early.
  • Argentina is catching more rains while they harvest their drought-decimated crops.
  • Southern Brazil rains may improve in the 6-10 and 11-15 to help their double-crop corn.

 

OUTLOOK

  • Not a lot of concern over the weather at this point, as it is still very early in the planting window.
  • The outlook is unchanged that corn acres are too low, demand is too strong, which I think means current prices are too cheap.  Speculators are holding somewhat aggressive long positions, so there will be some volatility as we consolidate, but over time, I look for better opportunities to sell corn than we are currently seeing.  Next upside targets for new crop corn are 4.20 and then 4.55.
  • Beans pulled back late last week, but remain near contract highs.  The outlook is unchanged, which is that after the short Argentine bean crop, prices can go higher from here.  We have already seen the market shake out the weak longs, so maybe we are getting close to pushing out of the range we have been in for the last few years.  Next upside targets for new crop beans are 10.80 and then 11.30.
  • Wheat pulled back overnight due to better rains expected in the US plains.  With weakness in the US Dollar Index, I think we are nearing a time when the focus will shift from the US production prospects to the US becoming more competitive in the export market.

 

Fun Fact of the Day:  The California grizzly bear, which is featured on California’s state flag, has been considered extinct since the early 20th century.

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