7/6/18

Morning Bullet Points - 07/06/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed to higher overnight in a quiet trade as the US implemented tariffs on $34 billion of Chinese goods.  China retaliated with a similar amount of tariffs.
  • Export sales this morning for wheat were 440,100 MT (300-500 expected), old crop corn 440,700 MT (500-800), new crop corn 232,100 MT (300-500), old crop soybean 561,600 MT (200-500), new crop soybeans 458,700 MT (200-400).
  • Decent sales relative to expectations with China canceling beans and other buyers taking them.
  • Soybean open interest higher on the break yesterday with speculators piling in to new shorts with the market trading at 10-year lows.  CFTC report will be out on Monday due to the holiday.
  • In a potential victory for ethanol, Scott Pruitt is out at the EPA.
  • Corn technically remains in its downtrend, although a potential double bottom is in place.
  • Soybeans technically remain in their downtrend with new lows yesterday.  Support at 8.50 basis Nov. and resistance 9.30.
  • Wheat technically held support at 4.80 and is now bumping into moving average resistance in the 5.05-5.10 area.

 

WEATHER

  • ND, SD, and MN catch some rain in the next 5 days while the rest of the Midwest is dry.
  • The 6-10 and 11-15 both have chances for rains to move through most of the corn-belt, which will limit any dryness concerns for now.
  • Temperatures run near normal for the next 5 days before heating up again in the 6-10.  The 11-15 period looks to run closer to normal.
  • Overall, nothing in the US to cause anyone to be too concerned about the weather.
  • Russia has better chances for rain later next week.

 

OUTLOOK

  • A lack of movement following the implementation of the tariffs would suggest the market has already priced much of the start of the trade war.  Where it ends, no one knows.
  • The market has taken the entire weather premium out of corn as we head into pollination.  We are well watered, so any heat in the 6-10 is limiting buying interest.  The market is technically weak, so additional downside is possible.  Nevertheless, longer term, buying corn at these price levels should work out well.
  • Soybeans have taken the brunt of the selling ahead of the tariffs.  The US crop is on pace to be a monster based on ratings.  Until corn can stabilize and reverse its trend, beans will probably struggle.  However, when corn does turn, there is not much in the way of resistance for beans until November gets to 9.30.
  • Wheat continues to outperform corn/beans on fears that the Russian and EU crops are shrinking.  Germany is the latest grower to have production revised lower, which as long as crops overseas are being revised lower, wheat will probably find buyers on pullbacks.

 

Fun Fact of the Day:  More than two-thirds of the deals that are agreed upon in "Shark Tank" never come to fruition.

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