8/6/18

Morning Bullet Points - 08/06/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed overnight with soybeans leaking lower on renewed US/China trade concerns.
  • USDA August WASDE will be out Friday with pre-report estimates out later today.
  • China said they would not be “extorted” while the US has not blinked yet either.
  • Managed funds on Friday showed up as buyers of 78,000 contracts of corn to reduce the net short to 52,000, net buyers of 3,000 soybeans to reduce the short to 58,000, and net buyers of 30,000 wheat to increase the net long to 53,000.  The buying in corn was larger than expected.
  • Crop ratings this afternoon expected to be steady to small reductions for corn and beans.
  • South Korea bought a cargo of corn late last week.
  • Corn technically is trending higher with moving average support below the market at 3.80 and resistance above at 3.93-3.95.
  • Soybeans technically are trending higher with the market closing near the highs the last two days.  Support below the market at 8.80 and resistance 9.00 and 9.30.
  • Wheat technically is trending higher with support near 5.55 and resistance at 6.00.

 

WEATHER

  • Warmer temperatures are seen tracking across the upper Midwest rather than the central Corn Belt the next 10 days.
  • Showers hitting the ECB the next few days before a drier pattern sets in for the 6-15 day period.
  • Overall, nothing too concerning from a national standpoint.
  • Europe continues to see an historical heat wave stress corn.

 

OUTLOOK

  • Corn finished out last week with solid gains as the market continues to shift focus back to the expected declines in US and global supplies in spite of high yield expectations in the US.  There has already been a decent move off the lows, but with global stocks to usage headed to 40-year lows while the global wheat supply continues to shrink, I think corn is undervalued here.  Look for pullbacks to be supported with higher prices likely over time.
  • Soybeans are getting hit overnight on trade fears.  The weather may be a little negative with the forecast running a little cooler as well.  Nothing new here, but beans have relatively worse fundamentals than corn/wheat with global demand a question.  Regardless, that did not stop the market from closing near the highs the last two days as the managed fund appetite to be short Ag commodities is declining.  Unless the corn market falls apart, look for buyers to step in on pullbacks in the beans.
  • Wheat is still watching the dust settle after Thursday’s moonshot.  Global production is not getting any bigger at this point, but we may need to correct further after the wild swings we saw last week.  Technically, the market still looks like it can go higher.

 

Fun Fact of the Day:  Mount Everest is the highest mountain in the world, but the tallest is actually Mauna Kea in Hawaii. This is because 'highest' is defined, as a measure of mean sea level to summit, while 'tallest' is a measurement from the bottom of the mountain to the top. From its base to its tip, Mauna Kea measures 33,465 feet.

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