10/2/18

Morning Bullet Points - 10/02/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mostly lower overnight, but firming up out of the gates at 8:30am. Corn is up 1 with soybeans up 5 cents, and wheat down a penny.
  • The strength to start the week came from optimism that NAFTA 2.0 was a sign of future trade deals (China) to come.
  • Crop ratings yesterday held strong with corn at 69% good-to-excellent and soybeans 68%.
  • FC Stone estimated national corn yield at 182.7 bpa and soybeans 54 bpa as the race to see who will put out the highest national yield estimate is on.
  • Brazil bean production is now estimated at 120.4mmt (119.5 last year).
  • An announcement regarding E-15 is rumored to be coming next week.
  • Corn technically is back at resistance near 3.65 with next resistance above at 3.75 and support at 3.60.  Market remains range-bound for now.
  • Soybeans technically remain range-bound with support at 8.40 and resistance 8.60.
  • Wheat continues to test support at the bottom of the channel it has been in since last winter.  Support at 5.10 and resistance 5.40 and 5.55.

 

WEATHER

  • Heavy rains expected to set in over the next few days to slow harvest across a wide swath of the Midwest.  Some harvest losses are possible, but not much of a concern yet.
  • Rains over the next 10 days in Brazil will help their crop get off to a good start.

 

OUTLOOK

  • Big buying showed up in corn to start the month, which most are crediting to the NAFTA deal.  Whether NAFTA was the key driver or not, the bottom line is that we have tightening global corn supplies in spite of a national corn yield over 180 bpa.  The funds are loaded short, so look for pullbacks to be well-supported for now.
  • Soybeans followed the corn market higher to start the week, settling at a new recent high.  Cash markets have firmed as farmer selling is extremely slow.  The fund position is an aggressive short, and the market has already priced in a lot of bearish news.  Keep in mind that beans have the worst fundamentals moving forward, which will leave them in the role of a follower.
  • Wheat was left out on the rally yesterday.  The market is holding at key support levels, so look for buyers to support.

 

Fun Fact of the Day: There are only a few dozen countries, including Australia, Japan, and Iceland, that are classified as "rabies free."

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