6/8/18

Morning Bullet Points - 06/08/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed this morning with sizable overnight ranges.
  • Agroconsult estimates Brazil soybean planting for the 2018/19 crop will increase by 1 million hectares.
  • Agroconsult sees Brazil 1st crop corn area down by 3%.
  • Agroconsult expected frost to further reduce the 2nd crop corn in Brazil.
  • Rosario Exchange lowered the Argentine bean production number to 35 MMT vs. 37 MMT previously.
  • IKAR lowered their Russian wheat estimate to 71.5 MMT from 73.5 MMT.  They lowered the total grain crop to 114.7 MMT from 117 MMT.
  • USDA will be out Tuesday with the June Crop Report, pleas see the attached estimates.
  • Fund selling continues to be a feature on the corn/bean break with corn open interest down significantly yesterday.
  • South Korea has been an active buyer of corn with estimates that they’ve bought 1 MMT over the last week.
  • The Brazilian Real continues to make new lows, dropping to the lowest level since spring of 2016 yesterday.
  • G7 summit today could lead to some moves in the US$.
  • Corn technically is dropping into a support area from 3.75-3.80 with Dec. dropping below 4.00.  The near-term trend is lower, but very oversold.
  • Soybeans technically broke out of their range to the downside with July trading to a new low for the year overnight.  Support for July at 9.65 and resistance at 9.80.
  • Wheat technically remains in its uptrend with support below the market near 5.15 and resistance at 5.55.

 

WEATHER

  • Above normal temperatures still seen through the end of the 10-day period.
  • Spotty rains over the next couple of weeks should keep the corn/bean crops in good enough shape from a national standpoint.
  • Ukraine wheat areas have chances for rains next week while Russia remains stressed.

 

OUTLOOK

  • The corn/bean markets continue to push out speculative length with a good weather outlook the most bearish input.  Bigger picture, it still seems like corn has a story with global corn stocks expected to drop to historically tight levels.  US demand should remain robust as European, Russia, and Ukraine all are expected to see lower harvests.  Brazil’s corn crop is still in the process of being revised lower.  The US needs to raise a monster, but the acres are set.  We need good weather the rest of the year to keep a lid on prices.  There should be good value in buying corn here.
  • Soybeans are following corn.  With corn dropping to the lowest levels since February, beans are trading at new lows for the year.  Look for beans to continue to follow the corn.
  • Wheat looks good technically, and the fundamental situation continues to develop with lower revisions starting for the Russian crop.  Look for pullbacks to be well-supported.

 

Fun Fact of the Day:  According to a new study, wild African elephants only sleep 2 hours per day – the shortest known sleep time of any land mammal.

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