7/31/18

Morning Bullet Points - 07/31/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets set to finish the month of July firm with warm temperatures supporting prices today.  Corn is up 5 cents and soybeans are up 20 cents.
  • Crop ratings came in yesterday at the top end of estimates with corn/soybean ratings steady from a week ago.
  • The corn crop is running well ahead of average, which that is unlikely to change with the temperatures now expected in the 6-10.
  • China’s Sinograin suggesting their soybean imports will lag in the coming year, which is probably already in the market.
  • National corn yield debate to heat up in the coming weeks as the current temperature forecast are probably going to make a 180+ yield tough to achieve.
  • Managed funds still holding sizable net shorts in corn/soybeans.
  • Corn technically is bumping into the 50 DMA overnight at 3.84.  The trend is higher with support under the market near 3.67.
  • Soybeans technically are trending higher with support for Nov. at 8.67 and resistance at 9.00 and 9.30.
  • Wheat technically hit the year’s highs overnight.  The base is in place, the trend is higher, and the repeated tests of this area suggests we could be on the verge of the next leg higher.

 

WEATHER

  • Well above normal temperatures now seen in the 6-10 period, which could put the brakes on some of the large national yield ideas.
  • Scattered rains seen over the next couple of weeks will limit any widespread dryness concerns.
  • Warm temperatures in Europe continue to stress corn and late maturing wheat.

 

OUTLOOK

  • The current forecast means we can probably forget about at 180+ national yield, which means US and global corn supplies are going to decline year over year.  Look for corn to work higher over time, but we are hitting resistance levels where a producer that is going to have “extra” bushels can consider letting some go.
  • Soybeans are a follower of the corn and wheat.  Nov. is hitting resistance in the 9.00 area with next big resistance 30 cents higher.  Beans should probably be used as a short-leg in inter-market spreads, so with the market at resistance right now, this is probably a place to consider selling “extra” bushels.
  • Wheat is breaking out of the range to the upside.  Look for buyers to support on pull-backs as the declining crops across several exporting countries may lead to that market “bidding for acres” this fall.

 

Fun Fact of the Day:  The first period of the day is called “ante meridiem”, (AM) which means before noon in Latin. The second period is called “post meridiem”, (PM) meaning after noon in Latin.

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