10/11/18

Morning Bullet Points - 10/11/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading mixed overnight in a pretty quiet trade as we head into the October crop report today at 11am CST.
  • Expectations are for higher corn and bean yields as well as higher corn and bean ending stocks from a month ago.
  • Twitter has been full of pictures of rain-soaked ripe beans across parts of NE, KS, IA, and MO while the pictures out of the Dakota’s have featured lots of snow.  None of that damage will be reflected on today’s report, but this massive bean crop is still not in the bin.
  • Cash corn/soybean markets continue to firm, as harvest is slow and farmer movement very limited.
  • Corn technically is reaching oversold and remains stuck in its trading range.  Support at 3.60 and resistance at 3.65.
  • Soybeans pulled back to the 20 DMA yesterday and are also stuck within their range.  Support at 8.48, 8.40 and 8.30.  Resistance at 8.60 and 8.80.
  • Wheat continues to test support at the bottom of the channel that started last winter.  Stochastics are oversold with support at 5.10 and resistance 5.40 and 5.55.
  • USDA reported cancellations of 140,000 MT of corn to unknown for 2018/19.

 

WEATHER

  • Rains finishing the next few days and then the outlook returns dry to allow harvest to resume.
  • Brazil continues to catch rains to keep most of the early growing conditions favorable for corn/beans.

 

OUTLOOK

  • Corn is stuck in its range waiting for the USDA numbers.  The market is leaning on higher production with any sub-181.7 bpa national yield likely viewed as supportive and cause for a rally today.  Corn is less susceptible to damage from rain than beans, but the current weather has not added any bushels either.  Regardless, the tightening of global supplies is not going to change any time soon, which points to higher prices over time.
  • Soybeans have pulled back going into the report today as early yield reports suggest the USDA will be increasing production.  A lot has changed over the last week, however with future production estimates likely headed lower due to recent wet/snowy weather on ripe beans.  Look for buyers to step in on any bearish reaction today as US supplies will very likely be overstated.
  • Wheat is trading at support going into the report.  The managed fund position has moved back to a net short.  The USDA has been overstating foreign production on the last several reports, so look for a move higher on any drop in global wheat production.

 

Fun Fact of the Day:  U.S. President Hoover and his wife would talk in Mandarin Chinese to prevent White House staff from eavesdropping.

 

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