12/31/18

Morning Commentary - 12/31/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets mixed overnight with Brazil weather concerns supporting.
  • The government shut down continues to limit export sales and commitment of traders news.  The January crop report, typically one of the biggest of the year, is scheduled for January 11th, but won’t happen if the shutdown is still happening.
  • Key items that are somewhat expected on the report are low winter wheat acres, lower US corn/bean production, and strong US feed usage for corn.
  • Chinese research group JCI said they look for China to import as much as 15mmt of corn, which would be a big deal considering their massive supplies.
  • Jordan tendered for 120 tmt of wheat.
  • Corn technically remains stuck in its range with support at 3.75 and resistance at 3.80.  Stochastics are starting to correct from oversold.
  • Beans technically are in an up-channel that started last Sep. with March support at 8.80 and resistance at 9.00.
  • Wheat remains in its long-term uptrend with key support near 5.00 continuing to hold.  Support at 5.00 and resistance at 5.25.

 

WEATHER

  • Center-south areas of Brazil continue to run below normal for rains with those areas expected to remain on the dry side for the next 10 days.
  • Argentina continues to catch rains to slow fieldwork.
  • Overall, the dryness in Brazil seems to be the biggest issue.

 

OUTLOOK

  • The lack of government reports is going to leave the market void of news.  Bigger picture corn outlook remains unchanged, though, with the US needing to add corn acres.  The JCI story about China corn imports is potentially a big deal.  If we get a surprising move to the upside over the next few days, it’s probably Chinese buying while the govt. is shut down.  Regardless, downside risk moving forward is likely somewhat limited in corn for the next few months.
  • Beans had a strong push higher on Friday and modest follow-through overnight.  Brazil’s bean crop looks to be getting smaller due to persistent dryness in center-south areas, but they are still going to harvest a big crop.  At the same time, China demand continues to disappoint.  The technical picture for beans looks better with support holding last week.  Bigger picture, though, we still have a lot of supply, which probably makes it hard to trade much above the recent highs.
  • Wheat was under pressure overnight.  Long-term support continues to hold and business continues to be done around the world.  As long as support is holding, look to trade wheat from the long side.

 

Fun Fact of the Day: Black eyed peas, ham, and cabbage are considered good luck if you eat them on New Year’s Eve or Day because it is believed they will bring you money. However, Lobster and chicken are considered bad luck because lobsters can move backward and chickens can scratch in reverse, so it is thought these foods could bring a reversal of fortune.

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