9/20/18

Morning Bullet Points - 09/20/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed overnight with beans/wheat giving back a small portion of their gains from yesterday while corn, which had much smaller gains is seeing some follow-through.
  • Bloomberg ran a story overnight that China could cut their import tariffs for many trading partners, including the US, as early as October.
  • Export sales this morning for wheat were 468,400 MT, corn sales 1,383,700 MT, soybeans 917,600 MT.
  • Pretty strong sales for both corn and soybeans.
  • Early harvest numbers for corn has many thinking the USDA may raise their already record high corn yield.
  • Activity picked up in corn call options yesterday.
  • Corn technically is seeing sitting near the lows on a continuous chart with the Sep. expiration level at 3.37 and July 3.30 two potential downside targets.
  • Soybeans technically have put in a pretty strong reversal off lows from earlier in the week.  Resistance is at 8.30 and then not much until 8.80.  Support below the market at 8.00.
  • Wheat remains in its long-term uptrend with support at 5.10 and resistance 5.40.
  • USDA reported 148,600 MT of corn to Mexico for 2018/19.
  • USDA reported 11,400 MT of corn to Mexico for 2019/20.

 

WEATHER    

  • Above normal temperatures today, quickly turn to below normal over the next couple weeks with rains expected to slow harvest.  Nothing too concerning this early in harvest, though.

 

OUTLOOK

  • Corn was able to bounce off lows yesterday and has some buyer stepping in again overnight.  A lot of bearishness is priced in with talk that the USDA needs to raise yields, managed funds are loaded to the short side, and US corn is the cheapest grain in the world.  With a pickup in call buying yesterday as well as what looked like a lot of bulls throwing in the towel, we may have just put in a low in corn.  There will be sellers to slow a rally from here as we are in the middle of harvest, but once we have hit the point of being the cheapest grain in the world, does the market need to get a lot cheaper when global corn supplies are 40-year lows?
  • Soybeans also are sitting with a massive speculative short in the market.  China hinted they would cut import tariffs as soon as October.  Whether it is all their trade partners or just the US, they are moving in the right direction.  Supplies are huge, but the speculative position in the market is one-sided.  A sustained trade above 8.30 could lead to some short-covering.  With the funds already short and producers not interested in selling beans, a bounce could exceed expectations.
  • Wheat stalled out yesterday at its 200 DMA.  The market remains in its long-term uptrend, however, so look for pull-backs to find buyers.

 

Fun Fact of the Day:  Certain hawks in Australia have been known to purposely spread wildfires to force prey out into the open.

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