6/4/18

Morning Bullet Points - 06/04/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading lower across the board overnight with US trade relations keeping buyers on the sidelines.
  • Managed funds on the CFTC report were net buyers of 2,400 contracts of corn as of last Tuesday to push the net long out to 202,000 lots, net buyers of 9,000 soybeans to push the net long out to 108,000 contracts, and net buyers of 17,000 wheat to push the net long to 15,000.  The buying in wheat was greater than expected.
  • Crop progress this afternoon expected to show near-record high corn ratings again this week.  The first soybean rating is expected to come in in the mid-70’s good-to-excellent.
  • Brazil corn production estimates are sliding more with most coming in 5-10 MMT below the USDA’s last estimate of 87 MMT.
  • Corn technically has pushed through the bottom of the channel that it has been in for the last few months.  Next support for July comes in at 3.83 and then 3.80.  A recovery above 3.95 needs to happen to re-start the uptrend.
  • Soybeans technically remain stuck in their range.  Nov. still has a gap at 10.15 that may need to fill before there is much chance for rallying.  The trend is sideways.
  • Wheat technically remains in its uptrend but is testing support at the bottom of the channel near 5.15.  Next support near 5.00 and resistance well above the market near 5.55.
  • USDA reported 114,300 MT of soybeans to Mexico for 2018/19.

 

WEATHER

  • Above normal temperatures are still expected for the next couple of weeks.
  • Rains look to be spotty for the next two weeks with some areas to see some hot/dry stress toward the end of the 2-week period.
  • Limited rains in Russia/Ukraine for the next couple of weeks.

 

OUTLOOK

  • The combination of US trade uncertainty, a lack of troubling weather, and corn/soybean/wheat markets that all have plenty of speculative long interest, is trumping the bigger picture supply/demand driven bullish outlook for corn.  I do not think we have seen marketing year highs, but a deeper correction appears to be in the works.  Longer term, I think bullish positions that have been put on during the current pullback will be fine, but the market is going to try its hardest to push out weak longs.  Use the drop to re-own previous sales and reduce upside price risk.
  • Beans continue to swing within their trading range with the lack of buying interest in corn limiting the buying interest in beans.  November has a gap at 10.15, which is a place that looks attractive to buy.
  • Wheat appears to be somewhat following corn.  The market is trading at moving average support currently, but if it drops below 5.15, the next support level comes in near 5.00.  Longer term, it seems like enough global wheat problems are festering that prices can go higher.

 

Fun Fact of the Day:  The name “woodchuck” has nothing to do with the wood or chucking – it comes from a Native American word, wuchak, which translates to “digger”.

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