News

September 14, 2018

 

 

NATIONAL CORN RECAP

BULLISH Pricing Indicators:

  • In Wednesday’s September 2018 WASDE report the USDA increased 2018/19 U.S. corn demand to a new record high of 15.105 billion bushels. All 3 major demand sectors saw increases including Feed & Residual Use, Ethanol & by-products, and Exports. No one’s talking about this…yet.
  • Also in the September WASDE report…2018/19 WORLD corn ending stocks were forecasted to drop 37.1 MMT or 19.1% versus 2017/18 (157.03 MMT versus 194.15 MMT). That’s a significant one-year swing in stocks and one that warrants sizable attention heading into 2019/20.

 BEARISH Pricing Indicators:

  • In Wednesday’s September 2018 WASDE report the USDA increased its 2018/19 U.S. corn yield estimate to a new record high 181.3 bpa, +3.5 bpa higher than the average trade guess and +2.9 bpa above the USDA’s August forecast. The USDA raised Illinois’s corn yield to an almost unthinkable 214 bpa (+7 bpa higher than August and +13 bpa above its previous record high of 201 bpa). Iowa also had its state corn yield increased substantially improving to 206 bpa (+4 bpa higher than August and +3 bpa above its previous record high of 203 bpa). Other states with notable yield increases were Nebraska +2 bpa to 198 bpa (record high), Indiana +6 bpa to 192 bpa (record high), Ohio +8 bpa to 188 bpa (record high), South Dakota +3 bpa to 173 bpa (record high), and Missouri +7 bpa to 138 bpa.
  • Also in the September 2018 WASDE report the USDA increased 2018/19 U.S. corn ending stocks 90 million bushels versus a month ago to 1.774 billion. This compares to the average trade guess of 1.639 billion bushels. The yield increase, which raised 2018/19 U.S. corn production 241 million bushels, attributed to the ending stocks increase.
  • In 5 out of the last 6-years the U.S. corn yield has actually gone up from the September WASDE report versus the USDA’s final yield figure in January. The only decrease came in 2014/15 and that was just -0.7 bpa.

SHORT-TERM PRICE OUTLOOK:  The U.S. corn carryout in my opinion doesn’t support CZ18 trading under $3.45…that said I’m not a seller at or below $3.50.  

 
 

NATIONAL SOYBEANS RECAP

BULLISH Pricing Indicators:

  • There isn’t anything fundamentally Bullish at this time. That said a Soybean Bull could make the case that the September WASDE report didn’t provide anything traders weren’t already anticipating. Furthermore after making a new contract low in November 2018 soybean futures at $8.21 ¼ on the day of the report; November futures actually rallied back that afternoon closing higher. That said if you’re buying soybean futures at current price levels it’s based on the premise that you believe all the negative fundamental news (higher yield, higher stocks, lower Chinese import demand) has now been priced into the market.

BEARISH Pricing Indicators:

  • Wednesday’s September WASDE report confirmed what many had already assumed and that was a substantially higher U.S. soybean yield. The 2018/19 U.S. soybean yield was raised to 52.8 bpa, +0.6 bpa higher than the average trade guess and +1.2 bpa above the USDA’s August forecast. The net effect on 2018/19 U.S. soybean ending stocks was a monthly increase of 60 million bushels. The U.S. soybean carryout improved to 845 million bushels, which exceeded the average trade guess of 830 million bushels. If realized the current stocks estimate would eclipse the previous record high by 271 million bushels or 47%.
  • 2018/19 World soybean ending stocks increased to a new record high of 108.3 MMT versus 106.0 MMT in August. If realized the current stocks estimate would eclipse the previous record high by 11.6 MMT or 12%. The USDA also forecasted record 2018/19 Brazil soybean production totaling 120.5 MMT versus 119.5 MMT in 2017/18. 2018/19 China soybean imports were reduced 1 MMT versus a month to 94 MMT, which is equal to the USDA’s estimate from 2017/18.
  • The USDA’s Weekly Crop Progress report showed the U.S soybean good-to-excellent rating improving 2% week-on-week to 68% versus 60% a year ago as of the week ending 9/9/2018. In particular…Illinois’s rating improved 3% to 79% good-to-excellent. Minnesota also enjoyed a counter-seasonal 2% weekly increase in its rating, which was reported at 71% good-to-excellent. 

SHORT-TERM PRICE OUTLOOK:  November soybean futures made a new contract low on Wednesday ($8.21 ½) and have since trended slightly higher.  It’s possible the most Bearish news has now been priced into the market.


SEPTEMBER 2018 CORN FUTURES

CZ8 TECHNICAL ANALYSIS CZ8 FUTURES DATE
Friday Close $3.505 9/13/2018
Previous Friday Close $3.67 9/7/2018
  Current Contract Low $3.4875 9/13/2018
     
  KEY RESISTANCE CZ8 FUTURES  

20-Day Moving Average

$3.634  
50-Day Moving Average $3.686  
     
  KEY SUPPORT CZ8 FUTURES  
9/13/2018 Day Low $3.4875  
8/31/2017 Day Low(CU17) $3.285
 

SEPTEMBER 2018 SOYBEAN FUTURES


 
SX8 TECHNICAL ANALYSIS SX8 FUTURES DATE
Friday Close $8.3625 9/13/2018
Previous Friday Close $8.44 9/7/2018
Current Contract Low $8.2125 9/12/2018
     
  KEY RESISTANCE SX8 FUTURES  
20-Day Moving Average $8.495  
38.2% Fibonacci Retracement $8.595  
     
  KEY SUPPORT SX8 FUTURES  
9/12/2108 Day Low $8.2125  
7/16/2018 Day Low (SQ18) $8.1050  


Written and produced by Marcus Ludtke of Commodity Marketing Company.

The information contained herein, or as an attachment, is gathered from sources we believe to be reliable, but cannot be guaranteed and should not be relied upon as such. Opinions expressed are subject to change without notice. Trading in commodity futures or options involves substantial risk of loss. Past results are not indicative of future results.