5/15/18

Morning Bullet Points - 05/15/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed by the overnight close after seeing higher prices much of the night.
  • Strength in the US Dollar is putting pressure on a lot of markets with US treasury rates at recent highs.
  • NOPA soybean crush today expected to be 161 million bushels, which would be a record for April.
  • Crop progress yesterday showed corn and soybean planting running above expectations with both near average.
  • Winter wheat ratings were up 2% to 36% good-to-excellent.
  • Spring wheat planting progress is 58% vs. 67% on average.
  • South Korea tendered for corn overnight.
  • Egypt tendered for wheat after the close yesterday with the US not expected to get any business.
  • Corn technically remains in its longer-term uptrend with support for July in the mid-3.90’s.  May futures expired at 3.89 yesterday, which is a potential downside target if the market starts to sell-off.
  • Soybeans technically remain range-bound with support holding yesterday at the bottom of the range.  May expired at 10.13 yesterday, which is a potential downside target.
  • Wheat technically remains in its longer-term uptrend with the market very oversold currently.  Support in the mid-4.90’s and resistance at 5.00.

 

WEATHER           

  • The northern half of the Midwest remains generally wet over the next two weeks, which will limit their ability to get caught up on fieldwork.
  • The southern half of the Corn Belt has some better chances for rain in the 11-15.
  • Overall, the biggest concern is the slow pace of northern planting, but there is time.
  • Brazil double-crop corn is expected to catch rains the next few days with Argentina seeing some much needed dry weather.

 

OUTLOOK

  • Corn was able to close off its lows yesterday and traded higher overnight in spite of the “negative” crop progress report.  I think you have to ask yourself what the main reason is for being bullish corn and decide if it is still valid.  The main reason, in my opinion, to be bullish is the declining world supplies and the low US acres.  At this point, I do not think either has changed.  There is potential for a pullback to the level where May futures expired, as there may be some negative impact from outside markets today, but the bigger picture bullish drivers remain intact.
  • Soybeans dropped to the levels that traded the first night that China tariffs were announced, and then they were able to bounce.  The supportive thing for soybeans is the Argentine crop failure, and then the “low” bean acres in the US.  The market is not accepting the acre number at this point, but if it did hold true for the report at the end of June, current bean prices could end up looking cheap.  Keep sales targets in place, but use the current pullback to re-own previous sales.
  • Wheat has pulled back to support levels.  The US Dollar strength has potential to influence the wheat the most, so a re-test of yesterday’s lows may be possible.  Longer term, the market still looks ok from a technical standpoint.

 

Fun Fact of the Day:  Agave, the plant used to make tequila, has a nocturnal molecular clock that could potentially be harnessed to make drought-resistant crops.

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