12/6/18

Morning Commentary - 12/06/2018

MARKET HIGHLIGHTS

  • Markets under pressure overnight with beans leading the way following news that Canada had arrested the CFO of Chinese telecommunications company Huawei at the request of the US.
  • Equity futures traded sharply lower overnight on the news while the impact on corn and wheat has been limited.
  • Export sales will be out tomorrow due to the Bush funeral with the CFTC report out Monday.
  • Egypt tendered for wheat yesterday with the story that they were late on payments limiting the interest from sellers.  Russia is expected to win the business.
  • Canada wheat production came in at 31.77mmt vs. expectations of 31.4.
  • Taiwan bought 119 tmt of milling wheat from the US.
  • Algeria bought 40 tmt of Argentine corn.
  • Corn technically hit resistance at the top of the range yesterday and has pulled back.  The repeated tests of that resistance suggest an eventual push through to the upside.  Support at 3.80 and resistance at 3.85.
  • Beans technically are pulling back to start the day.  The Sunday night gap is a logical downside target near 8.95.  Support at 9.00 and resistance 9.20.
  • Wheat has pulled back to the lows of the week and moving average support at 5.13.  The long-term trend is higher with resistance at 5.25.
  • USDA reported 106 tmt of corn to Mexico for 2018/19.
  • USDA reported 91 tmt of corn to Mexico for 2019/20.

 

WEATHER

  • Rains still seen hitting Argentina next week to slow planting progress, but a lot of progress is being made currently.
  • Brazil is expected to see rains quiet down in wet northern areas with most of the main growing areas in a favorable weather situation.

 

OUTLOOK

  • Corn grinded higher again yesterday, hitting the top of the range before pulling back.  With beans trading lower overnight, look for spillover selling in corn.  However, the markets ability to test resistance again at the top of the range increases the chances of an eventual push through to the upside.  Look for buyers to step in on a further pull-back.
  • Beans were spooked overnight after the arrest of the Huawei.  The gap that was left on Sunday looks likely to fill, and we can see how the market reacts there.  8.95-9.00 should be good support while resistance is well above the market near 9.20-9.30.
  • Wheat pulled back overnight, but was able to bounce off the low.  The US didn’t get any of the Egypt business, but I’m not sure anyone really wanted it with the recent news that they had been running late on payments.  As long as support is holding, look to trade wheat from the long side.

Fun Fact of the Day: 17.5 million donuts are eaten in Israel during the celebration of Hanukkah.

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