7/10/18

Morning Bullet Points - 07/10/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading lower this morning with corn/wheat under pressure.
  • Crop progress yesterday came in near expectations with corn down 1% to 75% good-to-excellent and soybeans steady at 71% good-to-excellent.  Spring wheat ratings jumped to 80% good-to-excellent, which was better than expected.
  • The delayed CFTC report showed managed funds as net sellers of 10,500 contracts of corn to push the net short to 71,000, sellers of 10,00 soybeans to push the short out to 54,000, and buyers of 10,000 wheat to reduce the short to 1,900.  All three positions were smaller net shorts than expected.
  • Egypt tendered for wheat yesterday with Russia making the lowest offer.
  • French farm ministry estimated their soft wheat crop at 36.1 MMT, just slightly below 36.6 MMT last year.  That would be larger than some of the recent estimates.
  • Thursday’s crop report is expected to show larger US corn, soybeans, and wheat stocks than a month ago.
  • Corn technically remains in its lower trend with Sep. support at 3.50 and resistance 3.62.
  • Soybeans technically in their lower trend, but Friday’s key reversal is still intact.  Support in the Nov. at 8.70 and resistance 8.80.
  • Wheat technically testing support near the 200 DMA at 4.96.  Support below there at 4.90 and resistance above the market at 5.10.
  • USDA reported 60,000 MT of corn to Egypt for 2017/18.
  • USDA reported 53,00 MT of corn to Egypt for 2018/19.
  • USDA cancelled 152,000 MT of sorghum to Mexico for 2017/18.

 

WEATHER

  • Temperatures seen running above normal over the next 5 days before dropping below normal during the 6-10 period.  The 11-15 temperature forecast is for normal to below normal.
  • Scattered showers move across NE, SD, N. IA, S. MN and WI over the next 5 days.  The 6-10 has a general rain system moving across the southern 2/3 of the corn-belt and scattered showers move through again in the 11-15.
  • The European, Ukraine, and Russian weather outlook is a little wetter/cooler over the next couple of weeks.

 

OUTLOOK

  • Nothing too surprising on the crop progress report yesterday, but the cooler temperature outlook will really help the corn.
  • Corn needs to hold above last week’s lows or the next leg lower may be underway.  The US crop is in good shape, but the bigger picture global outlook remains supportive.  If the market does trade lower, I do not think we will spend a significant amount of time down there.
  • Soybeans are trading the strongest this morning.  China media has reportedly been instructed to ease the negative rhetoric on Trump, which has some thinking the trade situation may be improving.  The market remains very cheap, cash markets have shown signs of firming, non-China export business is picking up, and the old crop/new crop spreads traded higher yesterday and again overnight.  I do not think the risk/reward of being bearish soybeans is good right now.
  • Wheat is getting hit on the better weather outlook in Europe/Russia.  Technically, the market may need to drop to fill the gap that was left last week, but the base that was built last winter is still in place.  Look for higher wheat over time.

 

Fun Fact of the Day:  The first woman to win a Nobel Prize was Marie Curie, who won the Nobel Prize in Physics in 1903 with her husband, Pierre Curie, and Henri Becquerel. Curie is also the only woman to have won multiple Nobel Prizes; in 1911, she won the Nobel Prize in Chemistry.

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