7/2/18

Morning Bullet Points - 07/02/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed this morning with corn/beans moving to negative territory this morning while wheat hangs onto gains.
  • Friday’s CFTC report showed managed funds as net sellers of 46,000 corn to push the net short to 60,300 contracts, net sellers of 31,000 soybeans to push the net short to 44,000, and net sellers of 11,500 contracts of wheat to push the net short to 12,400.
  • Weather is not as threatening in the US with some of the heat reduced while most areas have adequate weather.
  • Strategie Grains cut their forecast for French wheat production by 4 MMT on Friday.
  • China continues to buy soybeans of out South America with no interest in the US for now.
  • USDA said they would adjust numbers on the July USDA report to reflect the impact of tariffs if they are implemented by the July 6th deadline.
  • Still no resolution with US/China trade.
  • Corn technically remains in its lower trend with support for Sep. near 3.55 and resistance at 3.70.
  • Soybeans technically are in their lower trend with Nov. support at 8.80 and resistance at 9.00.
  • Wheat technically bounced off good support last week near 4.80 with follow-through to start the week.  Support for Sep. at 4.95 and resistance 5.10.

 

WEATHER

  • Cooler temperatures seen during the 6-10 and 11-15 periods for much of the Midwest.
  • Scattered rains seen over the next couple of weeks, which should limit dry pockets across the US.
  • International weather has dryness lingering over the majority of Russian production areas.
  • Ukraine caught rains over the weekend.

 

OUTLOOK

  • No new news regarding US/China trade relations, which until that changes, the soybean market will probably struggle.
  • Weather is mixed with excessive moisture seen in some parts of Iowa, but a more normal temperature outlook will leave the market uninterested in a weather story for now.
  • Corn ratings this afternoon are expected to be steady, but between too much rain and heat, I think there is a good chance that we have seen our highs in ratings (but they are still extremely high).
  • We will start to see more and more debate over the US corn yield with Friday’s acre number giving us more room for error.  Regardless, the US and world corn supply situation is far from burdensome.  Right now there is 15-20 cents downside risk to major long-term support, which makes me unenthusiastic on giving up ownership at these levels.  Long-term I think there will be plenty of opportunities to sell higher values as there is very little in the way of risk premium in the market right now.
  • Soybeans didn’t get the acre bump that I was fearing on Friday.  The market is probably going to struggle as long as there is uncertainty regarding trade.  If some resolution is announced, beans should trade sharply higher.  If not, I am not sure there is that much downside risk anyways.  Nov. is trading near major support, and the speculative position is already a large short.
  • Wheat is doing its own thing, as Russian wheat production is a big question mark.  Technically, the base that was put in place last winter is still pointing to higher prices.  Look for pullbacks to be supported for now.

 

Fun Fact of the Day:  Water usually turns stale because warmer water has faster-moving molecules, amplifying the flavors your taste buds can detect.

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