8/2/18

Morning Bullet Points - 08/02/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed overnight with European wheat contracts pulling wheat and corn higher, while another tariff announcement is weighing on the soy complex.
  • FC Stone put out at 178.1 bpa corn yield and 51.5 bpa on the beans.  I do not think the market was too surprised or it does not care.
  • Export sales this morning for wheat were 382,500 MT (200-450 expected), old crop corn 292,000 MT (300-600), new crop corn 986,100 MT (400-800), old crop soybeans 93,700 MT (150-500), new crop soybeans 543,300 MT (300-700)
  • Nothing major in the sales this week with total combined old and new sales coming in near expectations for corn/soybeans.  As the marketing year winds down, that happens.
  • Egypt tendered for wheat after the close yesterday, which is interesting as they usually try to buy pullbacks rather than multi-year highs.
  • US/China trade continues to be a concern with Trump raising the tariff to 25% from 10% and China responding that the US needs to “calm down”.
  • Corn technically remains in its uptrend with Dec. hovering around its 50 DMA at 381.5.  Support below the market near 3.75 and resistance 3.93.
  • Soybeans technically are in an uptrend with support for Nov. at 8.95 and 8.80.  Resistance at 9.00 and 9.30.
  • Wheat technically is making a new leg higher.  The base was built last winter, and the trend is higher.  Support for Sep. Chicago at 5.55 and resistance at 6.00.

 

WEATHER

  • Temperatures seen running cooler across the Midwest over the next two weeks as temperature outlooks are seeing crazy swing.
  • Scattered rains over the next few days, but the 6-10 is dry.
  • Better rains in Europe over the next couple of weeks will help their corn.
  • Rains improving in Australia.

 

OUTLOOK

  • Corn recovered part of yesterday’s losses overnight.  On the bearish side, corn is being pulled lower by soybeans on tariff problems, hedge pressure related to increased movement of old crop ahead of harvest, and strong US crop prospects.  The weather is not as threatening this morning either.  On the supportive side is the higher wheat market and tightening of global supplies.  My short-term bias is that we could pull back further, but I want to be a buyer of a 10-cent pullback.  The outlook for corn is good longer term with the world balance sheet tightening up but all eyes are on the US supply.
  • Beans are trading at the whims of the latest trade headline, but weather is pretty important right now as well.  The temperature outlook is better this morning, but there still is not much in the way of rain in the forecast through the middle of August.  Regardless, the high price of beans into China due to tariffs is likely hurting global demand, and beans had relatively worse fundamentals to start with.  Beans can go higher over time if corn/wheat trades higher.  If not, beans should be the downside leader.
  • Wheat has an interesting story as the EU crop estimates continue to shrink.  The market has had a pretty impressive run and looks to have more upside potential.  Look for pullbacks to find buyers.

 

Fun Fact of the Day:  During his eight-year administration, Dwight Eisenhower managed to squeeze in 800 rounds of golf.

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