7/3/18

Morning Bullet Points - 07/03/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading higher overnight, led by strength in the wheat.
  • Markets close at noon CST today for the Independence Day holiday.
  • Crop progress yesterday was lacking of any major surprises with corn ratings down 1% and soybeans down 2%.  Both remain at historically high levels.  Spring wheat ratings were steady at 77% good-to-excellent.
  • FC Stone estimated the Brazil bean crop at 117.36 MMT (USDA 119 on the June report).
  • Corn yield estimates are starting to be thrown around, and are high.  Plenty of talk of low 180 bpa national average.
  • Corn technically remains in its lower trend with support for Sep. at 3.50 and resistance 3.68.
  • Soybeans technically remain in their lower trend with support for August at 8.50 and resistance 8.80.
  • Wheat bounced off support near 4.80 again with resistance at 4.96 and then 5.10.

 

WEATHER

  • Cooler temperatures seen moving in later this week and normal temperatures expected for the majority of the corn-belt through the end of the 15-day period.
  • Scattered rains are seen the next few days, but the 6-10 is notably drier.  Chances for rains return in the 11-15.
  • Overall, the lack of rain in the 6-10 is something to keep an eye on as rains in the 11-15 will need to materialize.
  • Russia remains dry for the next two weeks while Ukraine is catching adequate rains for their crops.

 

OUTLOOK

  • Crop ratings have started their move lower with the highs of the year for ratings seen a couple weeks ago for corn and beans.
  • The corn market will make a low when the news is the most bearish.  I heard talk of a national corn yield of 182 bpa, which is getting lofty.  With the recent move lower, there is zero risk premium in the market.  With the 6-10 forecast turning drier, there is potential to catch the market leaning too hard to the short side IF the 11-15 were to shift drier too.  In spite of the crazy high yield estimates that are starting to be considered, ending stocks would still be forecast to drop year over year.  If you are long this market and feeling some margin pressure, this is not the time to bail, in my opinion.
  • Beans continue to struggle as trade relations are up in the air, crop ratings are good, and relative to corn, the bean fundamentals are not as supportive.  The market potentially put in a double bottom with yesterday’s lows essentially matching the low from the Monday night two weeks ago when the tariffs were announced.  Regardless of how bearish everything looks, the market is overdue for a bounce.
  • Wheat was sucked lower by the corn and beans yesterday.  It is trading higher overnight with bigger problems starting to be talked about with the Russian and EU wheat crops.  4.80 was able to hold yesterday, which is a good sign.  The base from last winter is still in place.  Look for pullbacks to find buyers.

 

Fun Fact of the Day:  Every odd number that exists has the letter “e” in it.

 

Have a great and safe 4th of July Holiday.

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