DAILY GRAINS COMMENTARY Tuesday June 12, 2018

Transcription

1 DAILY GRAINS COMMENTARY Tuesday June 12, 2018 DAILY SOY COMPLEX COMMENTARY 06/12/18 No sign of low but North Korea news long term supportive OVERNIGHT CHANGES THROUGH 6:05 AM (CT): SOY BEANS +7.0, BEAN OIL -0.1, SOYMEAL +1.9 OVERNIGHT DEVELOPMENTS: July soybeans are trading 7 1/4 cents higher this morning. Malaysian palm oil futures are down 1.4% this morning and September Dalian soybean futures are up slightly. Global equity markets overnight were generally higher with the exceptions the Russian, Spanish, British and French markets. Overnight Japanese PPI came in stronger than expected as did Tertiary industry activity readings. While the US and North Korea actually signed a Peace treaty, the US intends to leave sanctions in place until specifics are agreed-upon and verification is completed. France released its nonfarm payroll revisions for the first quarter and they were pulled down from the initial release. UK employment for April was also released and the number came in better than expectations but softer than the previous reading. German ZEW economic sentiment and current conditions survey readings contracted more than expectations. The North American session will start out with private surveys of weekly same-store sales and monthly business optimism, but will be highlighted by the May consumer price index that is expected to see a moderate uptick from April's 2.5% year-over-year rate. NEAR-TERM MARKET FUNDAMENTALS: North Korea developments are a positive longer-term outside market force for grain markets in general and could also help to ease risk fears. Positioning ahead of the USDA report today may have supported the bounce overnight. July soybeans closed lower for the sixth consecutive session yesterday and have closed lower in nine of the last ten sessions. The market is down over 95 cents since the May 29th high as the market has priced in very favorable weather so far this season. The weekend rains that fell across eastern Iowa, Illinois, Indiana and Ohio were seen at 2-4 inches in many areas. The weather continues to be non-threatening with the latest NWS 6-10 day forecast showing a warm and wet pattern over the entire Midwest from June The weekly soybeans planting update showed 93% complete compared to 87% last week and 91% last year. The conditions report showed 74% was rated good/excellent compared to 75% last week and 66% last year. The 10 year average for this time of year is 67%. This is the highest percent rated good/excellent for the second week of ratings while the lowest was 55% in The Illinois (largest soybean producing state) good/excellent (G/EX) rating went up 5% to 83% G/EX. Iowa's G/EX went down 2% to 78% and Indiana's G/EX went down 1% to 73%. Minnesota (third largest producing state) is rated 90% G/EX up 2% from last week. The only two states that are struggling look to be Missouri with 56% G/EX, down 11% from last week and South Dakota at 63% G/EX, down 7% from last week. Overall conditions are at a record and the forecast is bearish for now. The managed money traders reduced their net length by 34,799 contracts in soybeans to 72,299 contracts and by 11,942 contracts to 100,846 contracts in soybean meal. These funds were big sellers again yesterday and continue to liquidate stale length in both markets. Weekly export inspections for soybeans came in at 644,327 tonnes. As of June 7th, cumulative soybean export inspections for the marketing year have reached 84.4% of the USDA forecast versus a 5 year average of 90.8%. Conab's Brazilian soybean production will be released this morning with the average estimate at million tonnes, up from last month's million tonnes. The average estimates for today's USDA report has 2017/18 US ending stocks at 524 million bushels ( range) versus last month's 530 million. The US ending stocks are estimated at 440 million bushels (395-

2 702 range) versus last month's 415 million. The 2017/18 World ending stocks estimate is 91.3 million tonnes compared to 92.2 million last month. The 2018/19 World ending stocks estimate is 86.8 million tonnes compared to 86.7 million last month. The Argentine soybean production is estimated at 37.8 million tonnes compared to last month's 39.0 million. Brazil's soybean production is estimated at million tonnes compared to last month's million. TODAY'S MARKET IDEAS: July soybeans traded to within 1 1/4 cents to the August 2017 low of 952. It's evident that the speculative funds are exiting long positions in soybeans and soybean meal. What is scary is that as of June 5th, the length in soybean meal was still at 100,846 contracts within the market just above the 200 day moving average at Soybeans and soybean meal are oversold but margin call selling will likely continue. There probably will not be anything overly bullish or bearish in today's report, exports down some and crush up will likely be the highlights for the US balance sheet. World production could see Brazil up 1.0 million tonnes and Argentina down the same. Eventually the market may get to a point that is pricing in a 52 bushels/acre plus yield with Chinese relations never getting back to normal. Close-in support in July soybeans is at 956 1/2 and 944 1/4. With the oversold condition, it will not take much in the way of positive news to see a bounce to 994 for November soybeans. 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 (JUL) 06/12/2018: Momentum studies are 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 defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next downside target is 939 1/4. 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 963 1/4 and 977 1/4, while 1st support hits today at 944 1/4 and below there at 939 1/4. SOYBEAN OIL (JUL) 06/12/2018: Daily stochastics are trending lower but have declined into oversold territory. A negative signal for trend short-term was given on a close under the 9-bar moving average. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next downside target is now at The next area of resistance is around and 30.85, while 1st support hits today at and below there at SOYMEAL (JUL) 06/12/2018: Momentum studies are 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 is in a bearish position with the close below the 2nd swing support number. The next downside target is With a reading under 20, the 9-day RSI indicates the market is extremely oversold. The next area of resistance is around and 361.6, while 1st support hits today at and below there at DAILY CORN COMMENTARY 06/12/18 No sign of low with long liquidation threat; USDA report today OVERNIGHT CHANGES THROUGH 6:05 AM (CT):

3 CORN +3.0 OVERNIGHT DEVELOPMENTS: July corn is trading 3 1/2 cents higher this morning. Outside market forces are clearly positive as wheat and corn demand may improve in the years ahead "if" North Korea negotiations remain positive. Dalian September futures are down slightly. South Korea bought near 70,000 tonnes of corn overnight. NEAR-TERM MARKET FUNDAMENTALS: The market is seeing some bounce from an oversold condition and the USDA report could have some impact today. The move to the lowest level since January 24th would suggest that weather premium has already been taken out. The market is down over 40 cents in the last ten sessions. Near perfect weather and crop conditions that are near record levels have pressured prices with long liquidation seen from speculative funds. The managed money traders reduced their net length by 88,828 contracts (44% of their length) as of June 5th to just 113,599 contracts. Yesterday's fund selling was estimated at 30,000 contracts. The weekly corn conditions report showed 77% was rated good/excellent compared to 78% last week and 67% last year. The 10 year average for this time of year is 69%. The highest percent rated good/excellent was 81% in 1991 while the lowest was 48% in The top three producing states of Iowa, Illinois and Nebraska, representing 38% of all corn plantings, have good/excellent (G/EX) ratings at 81%, 82% and 86% respectively. The only two states that seem to be struggling are Missouri with 56% G/EX, down 11% from last week and South Dakota at 63% G/EX, down 7% from last week. Weekend rains fell over the central Midwest with amounts over 2 inches reported in several areas in Iowa, Illinois, Indiana and Ohio. The latest NWS 6-10 and 8-14 day outlook have a warm and wet pattern from June which will keep crop conditions strong. Weekly export inspections for corn came in at 1,408,902 tonnes. As of June 7th, cumulative corn export inspections for the marketing year have reached 72.5% of the USDA forecast versus a 5 year average of 70.5%. The open interest in corn went down 3,760 contracts on Friday. Conab's estimate for the Brazilian corn will be released this morning with the average estimate at 82.8 million tonnes versus the May estimate of 89.2 million and compared to the USDA May estimate of 87.0 million tonnes. The average estimate for today's USDA report has US ending stocks at billion bushels. ( range) versus last month's billion bushels. The US ending stocks are estimated at billion bushels ( range) versus last month's billion bushels. The average estimate for 2017/18 World ending stocks is at million tonnes compared to last month's estimate of million. The 2018/19 World ending stocks are estimated at million tonnes compared to last month's million. The average estimate for Argentina's corn production is at 32.5 million tonnes compared to last month's 33.0 million. Brazil's corn production is estimated at 84.1 million tonnes compared to last month's 87.0 million. TODAY'S MARKET IDEAS: The corn market is shedding length as the condition report came in with strong results as the crop is off to one of the best starts ever. Traders are aware of the decrease in world ending stocks from last year and the potential for US stocks to come down as well. Today's report should continue to ratchet down World ending stocks with a healthy decline in Brazil's winter corn production. Still, unless weather conditions take a turn for the worse in the next few weeks there will be estimates looking for a 180 bushel yield. With demand up a meager 175 million bushels from last year and using 88.0 million acres with a 180 yield, ending stocks come in at billion bushels, down 364 million bushels from last year's billion bushels. December corn support is at 388 and 379 3/4 with resistance at 396 3/4 and 403 3/4. Don't rule out a bounce to 408 1/2 on any positive news. NEW RECOMMENDATIONS: PREVIOUS RECOMMENDATIONS: 1) Long the July19/Dec19 spread from +16 1/2 cents with an objective of +89 cents. Risk a total of 12 cents from entry. 2) Long the July corn 390/420 bull call spread from 9 1/4 cents with an objective of 29. Risk to ) Short 1 December Corn $4.10 straddle (sold $4.10 call and $4.10 put) from 56 1/8 and long 10 December Corn $5.00 calls from 5 1/2 cents each. The net premium received is at 1 1/8. Use as an objective of +90 cents on the spread and risk a loss of 10 1/2 cents.

4 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 (JUL) 06/12/2018: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The close below the 9-day moving average is a negative short-term indicator for trend. The market is in a bearish position with the close below the 2nd swing support number. The next downside target is now at 358. Some caution in pressing the downside is warranted with the RSI under 30. The next area of resistance is around 373 1/4 and 382 1/4, while 1st support hits today at 361 1/4 and below there at 358. DAILY WHEAT COMMENTARY 06/12/18 USDA Update today; cash basis helping to support OVERNIGHT CHANGES THROUGH 6:05 AM (CT): WHEAT +0.4 OVERNIGHT DEVELOPMENTS: Chicago July wheat is trading 1 cent higher this morning and KC July wheat is up 1 cent as well. Outside market forces are positive with developments in North Korea. NEAR-TERM MARKET FUNDAMENTALS: If there is progress in North Korea ahead, food aid discussions could emerge and wheat may be the first commodity to see some benefit. Weakness in other grains helped to pressure the market yesterday even with signs of stronger demand in the cash market. Egypt is tendering for wheat today for July shipment. The last Egyptian tender was on May 15th with only 3 offers and one cargo bought from Ukraine at a price of $ per tonne. GASC recently reduced the demurrage charge the supplier pays in case a wheat cargo needs to be sieved to $2 per tonne from $3 per tonne previously which might increase offers. The weekly spring wheat conditions update showed 70% was rated good/excellent compared to 70% last week and 45% last year. The 10 year average for this time of year is 69%. The weekly winter wheat conditions report showed 38% was rated good/excellent compared to 37% last week and 50% last year. Kansas good/excellent (G/EX) rating was unchanged at 16% but the poor/very-poor (P/VP) went down 2% to 47%. Texas and Oklahoma saw slight declines in G/EX conditions last week with harvest progress at 58% in Texas and 49% in Oklahoma. The weekly winter wheat harvest report showed 14% complete compared to 5% last week and 16% last year. The 10 year average for this time of year is 12%. Dry weather in the Black Sea region continues to provide a supportive tone with production estimates on the decline. The Russian/Ukraine forecasts over the next two weeks continue to show heat and dryness. SovEcon reduced their Russian wheat production to 73.1 million tonnes from 77.0 million in May. Last week, IKAR reduced their Russian wheat production to 71.5 million tonnes from 73.5 million previously, ProZerno cut their Russian wheat production to 70.4 million tonnes from 71.0 million and the Russian Grain Union sees the wheat production at million tonnes. Grain lobby Coceral cut their EU wheat production estimate for 2018 to million tonnes from million previous. Weekly export inspections came in at 369,969 tonnes. As of June 7th, cumulative wheat export inspections for the marketing year have reached 1.5% of the USDA forecast versus a 5 year average of 1.8%. The open interest in Chicago went down 6,739 contracts on Friday with Kansas City down 2,400 contracts. The average estimate for today's USDA report has US ending stocks at billion bushels ( range) versus last month's billion. The 2018/19 US ending stocks estimate is 957 million bushels ( range) versus 955 million in May. The 2017/18 World ending stocks are estimated at million tonnes compared to million in May. The 2018/19 World ending stocks are estimated at million tonnes compared to million last month. The 2018 US wheat production estimate for All wheat is at billion bushels compared to billion last month. Winter Wheat is estimated at billion bushels compared to billion last month. The class breakdown for winter wheat is as follows: HRW is estimated at 641 million bushels versus 647 million last month, SRW at 318 million bushels versus 315 million last month and White Winter at 229 million bushels, unchanged from last month.

5 TODAY'S MARKET IDEAS: The wheat markets seem to be trying to unhitch itself from the recent wash out in corn and soybeans. Today's report might not have the bullish inputs but the potential production declines in the Black Sea cannot be discounted. We are hearing of a significant advance in cash basis bids for interior Kansas locations and the more positive cash tone may be seen as a supportive force just ahead. Close-in support for Chicago July wheat is at 506 1/2 followed by 500 3/4. September KC wheat support is at 542 3/4, with 565 and 571 1/2 as resistance. 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 (JUL) 06/12/2018: A negative indicator was given with the downside crossover of the 9 and 18 bar moving average. Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The market back below the 18-day moving average suggests the intermediate-term trend could be turning down. It is a slightly negative indicator that the close was under the swing pivot. The next downside objective is now at 500 3/4. The next area of resistance is around 522 3/4 and 533 3/4, while 1st support hits today at 506 1/4 and below there at 500 3/4. KC WHEAT (JUL) 06/12/2018: The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend. Declining momentum studies in the neutral zone will tend to reinforce lower price action. The intermediate trend has turned down with the cross over back below the 18-day moving average. The market's close below the pivot swing number is a mildly negative setup. The next downside objective is 521 1/4. The next area of resistance is around 542 1/2 and 552 1/4, while 1st support hits today at 527 and below there at 521 1/4. MINN WHEAT (JUL) 06/12/2018: Daily stochastics are trending lower but have declined into oversold territory. The market's close below the 9-day moving average is an indication the short-term trend remains negative. The market tilt is slightly negative with the close under the pivot. The next downside objective is 582 3/4. The next area of resistance is around 594 1/4 and 600 3/4, while 1st support hits today at 585 1/4 and below there at 582 3/4. RICE (JUL) 06/12/2018: Positive momentum studies in the neutral zone will tend to reinforce higher price action. The market's short-term trend is positive on the close above the 9-day moving average. Since the close was above the 2nd swing resistance number, the market's posture is bullish and could see more upside follow-through early in the session. The next upside objective is 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 CNAN / CNAZ / SSAN / SSAX / SMAN BOAN WHAN / WHAU /

6 RCAN KWAN / MWAN / OTAN / Calculations based on previous session. Data collected 06/11/2018 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 CNAN8 Corn 357 3/ / /4 CNAZ8 Corn 379 1/ / /2 SSAN8 Soybeans 939 1/ / / / /4 SSAX8 Soybeans 958 1/ / /2 998 SMAN8 Soymeal BOAN8 Soybean Oil WHAN8 Wheat 500 3/ / / / /4 WHAU8 Wheat 517 1/ / / /4 RCAN8 Rice KWAN8 KC Wheat 521 1/ / / /4 MWAN8 MINN Wheat 582 3/ / / / /4 OTAN8 Oats 238 1/ / / /2 247 Calculations based on previous session. Data collected 06/11/2018 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; and (iii) does not take into consideration, among other things, risk tolerance, net worth, or available risk capital. Any use or reliance upon the information or recommendations is at the sole discretion and election of the subscriber. The risk of loss in trading futures contracts or commodity options can be substantial, and traders should carefully consider the inherent risks of such trading in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of Lakefront Futures is strictly prohibited.