7/9/18

Morning Bullet Points - 07/09/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading lower overnight with sellers showing up early to give back part of Friday’s gains.
  • The CFTC will update the COT report this afternoon with managed funds expected to show up as big sellers of corn, soybeans, and wheat.
  • USDA will update their balance sheets on Thursday to reflect the updated planted acres.  A big shift in yield is unexpected on this report in spite of the lofty crop ratings.  Global wheat production will be a focus with EU and Black Sea crops expected to drop.
  • Crop ratings this afternoon expected to drop slightly due to the recent heat as well as excessive rains in Minnesota, but remain very good overall.
  • Weather is a little negative to start the week with a cooler/wetter outlook for the 6-15 period.
  • US/China trade relations still strained with nothing new.
  • Corn technically has moving average resistance above the market in the mid-3.60’s with support below at 3.55.
  • Soybeans technically put in a key reversal on Friday with support for the Nov. contract at 8.80 and resistance well above the market near 9.30.
  • Wheat technically appears to have re-started the uptrend that began last winter with resistance at 5.55 and support at 5.00.
  • USDA reported 132,000 MT of soybeans to unknown for 2018/19.

 

WEATHER

  • Warm temperatures expected to stick around over the next few days, but then a cool off begins with the 11-15 period expected to drop below normal.
  • Scattered rains seen the next 5 days while the 6-10 looks to have a more widespread event.  Scattered showers return in the 11-15.
  • Russia expected to catch some showers this week.

 

OUTLOOK

  • Some pullback is to be expected after the violent move higher that we saw on Friday.  Considering the “bearish” forecast, this does not seem like too bad of a performance overnight.
  • Corn has seen consolidation in the 3.50-3.60 area, with the move higher on Friday a push to the upper end of that range.  The bigger picture reason for being friendly prices remain intact, which is shrinking world corn supplies.  EU and FSU wheat production estimates continue to drop, which will help to lower global grain supplies.  I don’t believe there is much downside risk in corn from here, regardless of how good or bad the US crop finishes out.
  • Soybeans look to have put in a low on Friday as the market had been bombarded with bearish news and then reversed.  Whomever the market needed to push out, has likely been pushed out.  Fundamentally, there is no reason to be overly bullish on beans alone, but if corn is going to trade higher, beans are underpriced.
  • Wheat continues to find supportive news as the EU wheat harvest moves north.  The base from last winter looks to be in place, so look for pullbacks to be well-supported.

 

Fun Fact of the Day:  The name “hamburger” actually came from Hamburg, the second largest city in Germany. In the late 1700s, sailors who traveled between Hamburg and New York City often ate hard slabs of salted minced beef, which they called “Hamburg steak.”

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