8/8/18

Morning Bullet Points - 08/08/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading higher overnight with a sharply higher move in Chinese beans and meal leading to some spillover strength in the US.
  • China’s July soybean imports were 8 MMT, which is what started the buying overnight.
  • USDA out on Friday with corn yield expected to be 176.3 bpa and beans 49.6 bpa.  The pre-report estimates have been below the USDA for the last 3 years.  Please see the attached estimates for Friday.
  • The second round of tariffs on $16b worth of Chinese imports was finalized with little impact on the market this time around.
  • Corn technically is in its higher trend with consolidation seen in the mid-3.80’s.  Next resistance is near 3.93 and support below the market at 3.78.
  • Soybeans technically are in an uptrend with support near 9.00 and 8.80.  Resistance above the market at 9.20 and 9.30.
  • Wheat pulled back from highs yesterday, but remains in its uptrend.  Support for Sep. is at 5.55 and resistance well above the market at 5.90 and 6.00.

 

WEATHER

  • Heat lingers across the northern Midwest over the next couple of weeks, but the heart of the Corn Belt is running near normal.
  • Limited chances for rains are seen across the corn-belt over the next couple of weeks with hot/dry in the northern Midwest leading to some stress.

 

OUTLOOK

  • Corn is still seeing consolidation as we head into the report on Friday.  The USDA has exceeded expectations on corn yields the last few years, but none of those expectations were as high as they are this year.  After driving through north-central IL over the weekend and hearing reports around the country, I think the odds are increasing that we will get a supportive corn yield number (less than expected).  Now take into account that corn has a good outlook from a global supply situation as long as national corn yield comes in sub-180 and we should be looking at higher corn prices in the coming months.  Look for any pullbacks to be well supported.
  • Soybeans are also seeing some consolidation within their recent range as we head into the report.  Technically, it is looking like a low is in place.  Beans alone do not have the potential that corn does, but at some point, strength from corn will likely spill into the beans.  Look for pullbacks to be well-supported.
  • Wheat continues to work higher on lower global wheat production.  Technically, the base from last winter is in place.  Look for violent swings in the wheat, but I do not think we have traded our highs yet.

 

Fun Fact of the Day:  The one-cent coin was made legal tender by the Coinage Act of 1864. In 1909, Abraham Lincoln was the first historical figure to grace a U.S. coin when he was portrayed on the one-cent coin to commemorate his 100th birthday. The Lincoln penny was also the first U.S. cent to include the words "In God We Trust."

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