7/23/18

Morning Bullet Points - 07/23/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mostly higher to start this morning as the theme of quiet trade on Sunday nights continues.
  • Crop progress this afternoon is expected to show small declines again this afternoon from last week’s 72% good-to-excellent corn and 69% good-to-excellent for soybeans.
  • Friday’s CFTC report showed managed funds as net sellers of 25,000 contracts of corn to push the managed fund short out to 125,000, sellers of 5,000 soybeans to push the short out to 58,000, and buyers of 3,500 wheat to push the position to long 3,500 contracts.
  • Corn selling was a little greater than expected as that would have included the day the market put in a key reversal on July 12th.
  • Corn technically was able to push through moving average resistance on Friday with the downtrend that started in late May appearing to have run its course.  Support for Dec. at 3.64 and resistance 3.88.  The market is overbought following recent gains.
  • Soybeans technically have bounced to moving average resistance at the 20 DMA basis Nov. at 8.67.  The market is pushing against trendline resistance as well.  Support for Nov. at 8.50 and resistance 8.80.
  • Wheat broke out of its consolidation area to the upside on Friday and is following through this morning with moving average support for the Sep. contract at 5.12.  Resistance above the market at 5.55.  The higher trend has been re-established for now.

 

WEATHER

  • Below to well-below temperatures are seen setting in for the heart of the corn-belt over the next 10 days.
  • Scattered rains are seen over the next two weeks.
  • Russia wheat areas dry out over the next couple of weeks to allow harvest to pick up.

 

OUTLOOK

  • Corn is looking pretty good with the key reversal from a couple weeks back followed by a 5-day streak of higher closes.  Will today make it 6?  Regardless, that is a pretty strong signal to me that a low has been made and that we can now turn focus back to the tightening global supplies, which should be friendly prices moving forward.  There is still plenty that needs to be done with US trade, but there is a large speculative short in the market that is starting to feel some pressure.  Look for pullbacks to be supported.
  • Soybeans hit resistance at their 20 DMA last night, but they also had a key reversal followed by 5 consecutive higher closes.  US/China trade relations are still a concern, but demand from other buyers has stepped up on the break.  With a large speculative short already in the market and prices near 10-year lows, I think we have put in a low and can see prices continue to recover.
  • Wheat is taking the lead to the upside, led by European crops.  Production issues in many major exporting countries is helping to support.  With the breakout of the range on Friday, look to buy a pullback to the 5.10-5.12 area.

 

Fun Fact of the Day:  The average person has about 3 to 5 dreams per night, but some may have up to 7 dreams in one night. The dreams tend to last longer as the night progresses. During a full 8-hour night sleep, two hours of it is spent dreaming.

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