7/30/18

Morning Bullet Points - 07/30/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading higher overnight, led by strength in the wheat.  Corn is up 6 cents as of this writing with soybeans up 6 cents and wheat up 19.
  • Friday’s CFTC report showed managed funds as net sellers of 874 contracts of corn to push the spec. short out to 130,200, net sellers of 3,00 soybeans to push the spec. short out to 61,300, and net buyers of 20,000 wheat to push the net position to long 24,000 contracts.
  • Considering the price action in corn/soybeans, the fund positioning was a surprise.
  • Corn and soybean open interest was down Friday, which is partly related to option expiration, but also probably a sign of short covering.
  • German farmers have asked for 1b Euros for support as they endure what one person called the “worst crop of the century”.
  • Corn technically is trending higher with moving average resistance in the mid-3.80’s basis Dec. and support below the market near 3.65.
  • Soybeans are trending higher with support in the Nov. at 8.80 with resistance at 9.00 and 9.30.
  • Wheat technically is trading near the highs of the year’s range with resistance near 5.55 and support at 5.15.

 

WEATHER

  • Below normal temperatures seen for the next 5 days before temps warm up in the 6-10 and 11-15 periods, which would not be good for the finishing out corn crop.
  • Scattered rains are seen over the next couple of weeks, but no widespread event as beans start to require more water.
  • Europe continues to see some problems with corn areas dry.  Russia is going to turn wet to slow wheat harvest again next week.

 

OUTLOOK

  • Weather concerns being cited for the strength in corn as news is following the market, which is typical.  The managed fund short is starting to feel some pain with corn 30 cents off the mid-months lows.  The market will likely find some selling interest as Dec. gets into the 3.80’s to slow a rally, but the bigger picture global outlook continues to be very supportive with quite a bit of upside potential if US production ideas start to drop.
  • Soybeans are recovering off their lows along with the corn market.  The funds are still holding a sizable short, which is supportive.  The bean supply situation is not as supportive as the corn, so a bigger move higher from here will need to be following the corn.  9.00-9.30 basis Nov. is an area where there could be some new selling interest.
  • Wheat continues to be supported by lower crop ideas in the EU as well as disappointing spring wheat yields on last week’s tour.  With the nearby Chicago wheat contract hovering near the highs of the year for the 5th time, I think it is likely we eventually break out and trade to new levels.  Look for pullbacks to be supported.

 

Fun Fact of the Day:  South Koreans are required by law to use Internet Explorer for online shopping and banking.

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