DAILY GRAINS COMMENTARY Friday June 29, 2018

Transcription

1 DAILY GRAINS COMMENTARY Friday June 29, 2018 DAILY SOY COMPLEX COMMENTARY 06/29/18 Without help from Weather or China; supply news bearish OVERNIGHT CHANGES THROUGH 6:05 AM (CT): SOY BEANS +2.0, BEAN OIL +0.0, SOYMEAL +0.2 OVERNIGHT DEVELOPMENTS: November soybeans are trading 2 1/4 cents higher this morning. Dalian soybean futures were up 0.75% this morning and Malaysia palm oil futures were down 0.75%. There were 1,075 contracts delivered against the July soybeans on first notice day today. There were no deliveries for meal and 1,040 for July soybean oil. Global equity markets overnight recovered with the exception the Australian market. In addition to a slight improvement in EU political tensions following an immigration deal, the markets also saw favorable UK growth revisions. The Asian trade was presented with a slightly softer than expected may Japanese factory output reading that were supposedly the result of labor force tightness. However Japanese jobless figures fell to the lowest level in 25 years and economists were generally upbeat toward future prospects. From the European trade, the market saw a much bigger than expected contraction in German retail sales for the month of May, a slightly better-than-expected French consumer spending reading and a modest uptick in French producer prices. However the most critical economic reading from the European continent came from Germany where unemployment fell by slightly more than expected. The North American session will start out with May personal income which is expected to see a minimal uptick from April's 0.3% reading. May personal spending is forecast to see a modest downtick from April's 0.6% reading. The June Chicago PMI index is forecast to have a moderate decline from May's 62.7 reading. A private survey of June US consumer sentiment is expected to see a minimal downtick from the previous 99.3 reading. NEAR-TERM MARKET FUNDAMENTALS: The market remains in a steep downtrend and will need help from the weather, a shift in China trade tensions or a surprise in the USDA reports to see a recovery bounce. November soybeans closed down to the lowest level since March For the week so far, the market is down 32 3/4 cents and for the month so far the market is down $1.50 3/4. December crush margins settled at contract highs at $1.71 3/4 and the highest for the nearby crush since November There remains roughly 170 million bushels of old & new crop outstanding soybean sales on the books that may begin to get cancelled or rolled forward. The USDA Foreign Ag Service lowered the China soybean imports to million tonnes versus the official USDA June estimate at million tonnes. However, the FAS import estimate excludes the impact from China's planned tariffs on US supplies set to become effective July 6th. There are plenty of market moving factors in play today with: first notice day for July contracts, USDA June 1st Stocks and Planting Intentions, and the end of the month and quarter. The average estimate for today's June 1 Grain Stocks and Planting Intentions report has June 1 stocks at a record high billion bushels ( billion range) compared to last year's 966 million bushels. Soybean plantings are estimated at million acres ( million range) versus the March plantings at million and compared to last year's million acres. Weekly export sales for soybeans came in at 358,500 tonnes for the current marketing year and 642,300 for the next marketing year for a total of 1,000,800 tonnes. As of June 21st, cumulative soybean sales stand at 12.1% of the USDA forecast versus a 5 year average of 15.8%. There is an interesting breakdown with old crop sales seeing Vietnam in for 79,000 tonnes switched from Unknown destinations. Bangladesh bought 64,000 tonnes and Iran 60,000 tonnes switched from China. New crop sales saw Pakistan, Thailand and Mexico in for decent amounts. Net meal sales came in at 146,300 tonnes for the current marketing year and 75,500 for the next marketing year for a total of 221,800 tonnes. Cumulative meal sales stand at 95.8% of the USDA forecast versus a 5 year average of 92.2%. Net oil sales came in at 30,500 tonnes for the current marketing year and 2,400 for the next marketing year for a total of 32,900 tonnes.

2 TODAY'S MARKET IDEAS: November soybeans started the week with an outside day lower close on Monday and have continued to leak lower all week. The market is just 19 cents off last week's spike low at 864 1/2. Today's report could follow the trend of the last five years and increase the soybean acreage number. The trade is looking for a 700,000 acre increase from the March estimate. Another leg down for August soybeans leaves 825 3/4 as next target. Consider buying the August soybean 840 put near 10 1/2 cents with an objective of 27. Close-in resistance in November soybeans is at 896 3/4 followed by 904 1/4. The next downside target is at 843. NEW RECOMMENDATIONS: PREVIOUS RECOMMENDATIONS: SOYBEAN COMPLEX TECHNICAL OUTLOOK: Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report. SOYBEANS (NOV) 06/29/2018: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The market's close below the 9-day moving average is an indication the short-term trend remains negative. It is a slightly negative indicator that the close was under the swing pivot. The next downside objective is now at 874 3/4. The 9-day RSI under 20 suggests the market is extremely oversold. The next area of resistance is around 888 3/4 and 895 1/2, while 1st support hits today at 878 1/4 and below there at 874 3/4. SOYBEAN OIL (DEC) 06/29/2018: Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The market's close below the 9-day moving average is an indication the short-term trend remains negative. It is a slightly negative indicator that the close was lower than the pivot swing number. The near-term upside target is at The next area of resistance is around and 30.12, while 1st support hits today at and below there at SOYMEAL (DEC) 06/29/2018: Daily stochastics are trending lower but have declined into oversold territory. The market's short-term trend is negative as the close remains below the 9-day moving average. The market's close below the pivot swing number is a mildly negative setup. The next downside target is The market is approaching oversold levels on an RSI reading under 30. The next area of resistance is around and 335.5, while 1st support hits today at and below there at DAILY CORN COMMENTARY 06/29/18 Downside limited by tighter world stocks and heat in July OVERNIGHT CHANGES THROUGH 6:05 AM (CT): CORN +2.4 OVERNIGHT DEVELOPMENTS: December corn is trading 3 cents higher this morning. China Dalian futures are up 0.22%. Outside market forces are positive with a hard break in the US dollar and higher stock market. There were 859 contracts delivered against the July corn on first notice day today. NEAR-TERM MARKET FUNDAMENTALS: Ideas that the weather outlook into mid-july is less threatening helped to spark renewed selling from fund traders. December corn extended lower yesterday on forecasts that

3 show cooler temperatures in the Midwest for the extended day outlook. The market experienced a new lifeof-contract low close. For the week so far, the market is down 12 cents and for the month down 47 3/4 cents. The next downside target is the contract low from last week's spike down at 360. The average estimates for today's June 1st Grain Stocks and Planting Intentions report has June 1st corn stocks at billion bushels ( billion range) compared to last year's billion bushels. The average estimate for corn plantings is million acres ( million range) versus million in the March report and compared to million acres last year. The latest NWS 6-10 day outlooks continues to show above normal temperatures and below normal precipitation from July 4th to July 8th with the center of the ridge sliding west over most of Iowa, Minnesota and South Dakota. The NWS 8-14 is in agreement with the mid-day GFS and pushes the heat to the far west, leaving seasonal temperatures for most of the Midwest from July 6th-12th. Precipitation looks to be below normal for the western belt and normal for the eastern belt during that period. Weekly export sales came in at 849,900 tonnes for the current marketing year and 636,800 for the next marketing year for a total of 1,486,700 tonnes. As of June 21st, cumulative corn sales stand at 8.0% of the USDA forecast for 2018/2019 (next) marketing year versus a 5 year average of 7.8%. The open interest in corn went down 23,767 contracts on Wednesday and is down nearly 120,000 contracts in the last four sessions. TODAY'S MARKET IDEAS: December corn unraveled late in the session yesterday on what looked to be selling from weak longs after the mid-day maps got a touch cooler in the day forecast. The trade heads into the end of the week and end of the quarter today with some volatility likely from the June stocks and Planting Intentions report. December corn is now 26 cents below the December 2017 contract on this date with a much brighter outlook for US and world ending stocks. The next downside target is at 360 with 379 and 386 1/2 as overhead resistance. The downside looks very limited. NEW RECOMMENDATIONS: PREVIOUS RECOMMENDATIONS: CORN TECHNICAL OUTLOOK: Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report. CORN (DEC) 06/29/2018: The daily stochastics gave a bearish indicator with a crossover down. Daily stochastics are trending lower but have declined into oversold territory. The close below the 9-day moving average is a negative short-term indicator for trend. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next downside target is 360 1/4. The 9-day RSI under 30 indicates the market is approaching oversold levels. The next area of resistance is around 369 3/4 and 375, while 1st support hits today at 362 1/4 and below there at 360 1/4. DAILY WHEAT COMMENTARY 06/29/18 Oversold and vulnerable to at least a bounce OVERNIGHT CHANGES THROUGH 6:05 AM (CT): WHEAT +3.4 OVERNIGHT DEVELOPMENTS: Chicago September wheat is trading 4 cent higher this morning and KC September wheat is up 5 cents. Outside market forces are supportive with a sharp drop in the US dollar and higher global equity

4 markets. There was only 1 contract delivered against the July wheat on first notice day today and 284 contracts delivered for KC wheat. NEAR-TERM MARKET FUNDAMENTALS: The Kansas City market continues to liquidate with open interest down over 29,000 contracts over the last six sessions. The Kansas City September/Chicago intra-market spread traded down to a new low at 12 cents premium Chicago early in the session yesterday. At the beginning of June, the managed money trader gross long in Kansas City wheat was at 74,876 contracts and the net long was 57,756 contracts. By comparison, the managed money trader gross long in Chicago wheat was at 104,374 contracts but the net long was just 16,286 contracts. Clearly the Kansas City trade was oversubscribed from the speculative funds. The average estimate for today's June 1 Stocks and planting intentions report has June 1 stocks at billion bushels ( billion range) compared to billion last year. The All wheat plantings are estimated at million acres compared to the March estimate at million. Spring wheat plantings are estimated at million acres ( million range) versus million in March and compared to million last year. Durum plantings are estimated at 2.01 million acres ( million range) versus 2.00 million in March and compared to 2.31 million last year. Russian wheat exports were seen at 40.2 million tonnes for the season so far through June 27th according to the Russian Ag Ministry. Ukraine's wheat output is estimated at 24.7 million tonnes due to yield declines in the southeast regions according to Agritel. This is the lowest estimate so far with the Ukrainian Grain Association at 25.8 million tonnes and UkrAgroConsult at 25.5 million tonnes. Net weekly export sales came in at 563,700 tonnes. As of June 21st, cumulative wheat sales stand at 21.5% of the USDA forecast versus a 5 year average of 29.8%. TODAY'S MARKET IDEAS: Chicago September remains oversold but is just above last week's low of 480. A close below this level projects down to the swing low objective at 445 1/4. Kansas City September took out last week's low of 472 1/4 yesterday with the next downside target the contract low at 455 3/4. Close-in resistance for Chicago September wheat is at 488 1/2 followed by 495 1/2. Resistance for Kansas City wheat is at 476 3/4 followed by 483 3/4. NEW RECOMMENDATIONS: PREVIOUS RECOMMENDATIONS: WHEAT TECHNICAL OUTLOOK: Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report. WHEAT (SEP) 06/29/2018: Daily stochastics are trending lower but have declined into oversold territory. The close below the 9-day moving average is a negative short-term indicator for trend. The daily closing price reversal down is a negative indicator for prices. It is a slightly negative indicator that the close was under the swing pivot. The next downside target is now at 475 3/4. The next area of resistance is around 488 1/2 and 495 1/2, while 1st support hits today at 478 1/2 and below there at 475 3/4. KC WHEAT (SEP) 06/29/2018: Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The close below the 9-day moving average is a negative short-term indicator for trend. The market's close below the 1st swing support number suggests a moderately negative setup for today. The next downside objective is 464 1/2. Some caution in pressing the downside is warranted with the RSI under 30. The next area of resistance is around 476 3/4 and 483 3/4, while 1st support hits today at 467 1/4 and below there at 464 1/2. MINN WHEAT (SEP) 06/29/2018: The market was pushed to a new contract low. Momentum studies are

5 declining, but have fallen to oversold levels. The market's short-term trend is negative as the close remains below the 9-day moving average. The market's close below the pivot swing number is a mildly negative setup. The next downside target is now at 531. More downside action may be limited by the RSI under 20 putting the market in extremely oversold territory. The next area of resistance is around 541 1/4 and 546 1/4, while 1st support hits today at 533 3/4 and below there at 531. RICE (SEP) 06/29/2018: The market back below the 40-day moving average suggests the longer-term trend could be turning down. A positive indicator was given with the upside crossover of the 9 and 18 bar moving average. Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. The market's close above the 9-day moving average suggests the short-term trend remains positive. The daily closing price reversal down puts the market on the defensive. The swing indicator gave a moderately negative reading with the close below the 1st support number. The near-term upside objective is at The next area of resistance is around and , while 1st support hits today at and below there at DAILY TECHNICAL STATISTICS 9 DAY RSI 14 DAY RSI 14 DAY SLOW STOCH D 14 DAY SLOW STOCH K 4 DAY 9 DAY 18 DAY 45 DAY 60 DAY CLOSE GRAIN COMPLEX CNAZ CNAU / SSAX / SSAQ / SMAZ BOAZ WHAU / WHAZ / RCAU KWAU MWAU / OTAU / Calculations based on previous session. Data collected 06/28/2018 Data sources can & do produce bad ticks. Verify before use. DAILY SWING STATISTICS Contract Support 2 Support 1 Pivot Resist 1 Resist 2 GRAIN COMPLEX CNAZ8 Corn / / /4 375 CNAU8 Corn 348 1/ / /4 SSAX8 Soybeans 874 1/ / / /2 SSAQ8 Soybeans 858 1/ / / / /2 SMAZ8 Soymeal BOAZ8 Soybean Oil WHAU8 Wheat 475 1/ / / / /2 WHAZ8 Wheat 492 1/ / /4 RCAU8 Rice KWAU8 KC Wheat 464 1/ / MWAU8 MINN Wheat 530 3/ / / / /4 OTAU8 Oats / / / /2 Calculations based on previous session. Data collected 06/28/2018 Data sources can & do produce bad ticks. Verify before use. ***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. Any information or recommendation contained herein: (i) is not based on, or tailored to, the commodity interest or cash market positions or other circumstances or characterizations of particular investors or traders; (ii) is not customized or personalized for any such investor or trader;

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