9/26/18

Morning Bullet Points - 09/26/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed overnight with corn pulling back into the close of the night session while soybeans/wheat held gains.
  • Stories were making the rounds yesterday of ramped up exports of beans to Argentina and Brazil as those two countries sell everything they can to China at tariff-related inflated prices.
  • The Fed is expected to announce another rate hike this afternoon, which would be the third of the year and on schedule with the plan they have mapped out.
  • Corn technically posted its 5th consecutive higher close, increasing the odds that a low has been made.  The market is still in the bottom portion of the range that we’ve traded the last few months.  Support is at 3.60 and resistance 3.70.
  • Soybeans technically remain in the lower end of their range with support for Nov. at 8.30 and resistance 8.80.
  • Wheat technically remains in a long-term uptrend with support at 5.10 and resistance 5.40.
  • USDA reported 650,000 MT of soybeans to Mexico for the 2018/19 marketing year.

 

WEATHER

  • A wet outlook for much of the Midwest over the next couple of weeks will slow down harvest, but probably not overly concerning this early in the fall.
  • South American weather has chances for needed moisture as they just get started with planting.

 

OUTLOOK

  • Corn just finished 5 consecutive higher closes, which gives quite a bit of confidence that a low is in place.  The bearish news (big yields) is in the market and “the funds” are stuck short.  There has been a pretty good rally in a short amount of time, so we may see the market take a breather in here, but overall supply fundamentals are supportive moving forward so look for buyers to step in on any 5-10 cent pull-backs.
  • Soybeans got some good news this morning in the big sale to Mexico.  The market had been unexpectedly strong last week and again yesterday, which may have something to do with this sale.  There is nothing here to change the idea that beans will be the weak leg with corn/wheat outperforming and needing to go higher to give beans a chance at rallying.  If anything, a spike this morning related to the sale could very well run into sellers.
  • Wheat/bean spreaders were selling wheat yesterday, which weighed on the wheat market.  The long-term trend is higher with global supplies shrinking.  Look for pullbacks to find buyers.

 

Fun Fact of the Day:  Bananas do not grow on trees. Rather, they grow from a root structure that produces an above ground stem. The plant is specifically classified as an arborescent (tree-like) perennial herb; in fact, it is the largest herbaceous flowering plant. The banana plant being an herb is that the banana itself is a berry.

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