10/9/18

Morning Bullet Points - 10/09/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed overnight with activity in the soybean/wheat spreads again.
  • Crop progress this afternoon expected to show corn harvest near 35% complete with delays unlikely to show up on the report until next week.
  • Report out on Thursday with US corn/soybean yield data likely obsolete as the current weather is going to likely take some yield off.
  • Trump expected to announce year-round E-15, which could add 50-70 mbu of corn demand.  There is also an expectation that will change the way RINs are traded.
  • Wheat numbers could be interesting on Thursday as the USDA has been slow to revise lower production in Australia, Ukraine, Russia, and the EU.
  • Corn technically seeing choppy trade near the 50 DMA.  The market is range-bound with support at 3.65 and resistance at 3.75.
  • Soybeans technically posted a doji yesterday and traded lower overnight.  The market is range-bound, but overbought with questionable fundamentals.  Resistance at 8.70 and support at 8.60.
  • Wheat technically continues to test support near the bottom of the channel that has been traded since last winter.  Support at 5.10 and resistance 5.40.
  • USDA announced 120,000 MT of HRW to Bangladesh on the daily report.

 

WEATHER

  • Heavy rains seen across the Midwest for the next 5 days to limit harvest progress as well as likely taking the top end of yields off.
  • A dry outlook is seen later in the 6-10 and the 11-15.
  • Brazil expected to catch rains over the next couple weeks to keep early conditions favorable.

 

OUTLOOK

  • Corn continues to struggle to get momentum going in either direction going into the report on Thursday.  The global stocks situation is supportive with funds covering shorts on pullbacks while harvest pressure is limiting upside.  Regardless, it is looking more as if a harvest low is in place and the current weather likely means the USDA will have to lower national corn yield on future crop reports, but not Thursday.
  • Soybeans climbed to start the week as currency moves in Brazil were supportive.  The USDA is likely to surprise with a big national yield on Thursday, but current weather suggests they will end up revising it lower on later reports.  Regardless, beans have the weakest fundamentals moving forward and pulled back from highs yesterday.  I think the bean market is ripe for a correction.
  • Wheat continues to chop around the 5.10-5.20 area with the market unable to get momentum going in either direction.  The fund position has turned to a small short, and I look for the USDA to put out supportive numbers as their global production numbers drop to align closer to what many other private estimates have been running.  Look for pull-backs to find buyers.

 

Fun Fact of the Day:  If you are more than 7 ft. in height, you are considered a giant (84 inches or 2.13 m)

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