10/25/18

Morning Bullet Points - 10/25/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading lower overnight following terrible corn/bean export sales as the trade war repercussions continue to show.
  • Export sales this morning for wheat were 442.6 tmt (200-500 expected), corn 349.5 tmt (400-800), beans 212.7 tmt (300-700), meal 203 (50-300), and oil 26.3 (0-22).
  • Terrible corn and bean sales especially for this time of year.
  • Wheat sales were within expectations, but the US is still not getting enough business to have a supportive impact on the market.  Black Sea origin wheat is still winning most export business around the globe.
  • IGC raised their wheat production for 2018/19 to 729mmt with China accounting for most of the gain.  They left corn production stable at 1.074bmt.
  • October FSA data is suggesting lower corn/soybean harvested acres.
  • Corn technically hovering around the 3.70 level as we head into Nov. expiration.  Support at 3.65 and resistance 3.75.
  • Beans technically are working into the lower portion of the range we’ve been in since early June.  Support at 8.40 and 8.30.  Resistance at 8.50 and 8.80.
  • Wheat technically is breaking down with a recovery above 5.00 needed to avoid the start of a move lower.

 

WEATHER

  • Chances for rains to slow harvest late in the week, but nothing too significant.
  • Scattered rains in the 6-10 also have the potential to limit progress, but overall nothing too concerning.
  • Brazil is expected to continue to get rains over the next two weeks with wetness concerns now being talked about in S. Brazil.

 

OUTLOOK

  • Corn is stuck between a trade war and tightening global supplies.  We don’t sell any meaningful amount of corn to China, but it is weighing on beans, which are weighing on corn.  I still think we can seasonally work higher from this area as global demand is still outpacing global supply.  Look for buyers to show up in the 3.65 area basis Dec.
  • Beans are seeing terrible exports at the time of year when they should be the biggest.  The USDA has accounted for the reduced demand in their balance sheets, but the market is still seeing selling pressure as the disaster that is the US soybean export situation comes to fruition.  Beans need a trade deal.
  • Wheat is on the verge of ending the long-term uptrend.  Global supplies are relatively tight, but that hasn’t had an impact on the market.  If the market can’t recover and close higher today, it’s probably time to reverse and look for selling opportunities.

 

Fun Fact of the Day: Bones stop growing after puberty along with muscle and fat cells that also stop dividing. But cartilage continues to grow until the day you die. Not only does cartilage grow, but the earlobes elongate from gravity.

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