News

September 21, 2018

 

 

NATIONAL CORN RECAP

BULLISH Pricing Indicators:

  • Thursday’s Weekly Export Sales report showed U.S. corn sales of 54.5 million bushels for the week ending 9/13/2018. Crop year-to-date sales are already at 651.7 million bushels versus 434.2 million a year ago; up 50%. As of the September 2018 WASDE report the USDA was estimating 2018/19 U.S. corn exports of 2.400 billion bushels, down 25 million from 2017/18. That said based on the fast early pace to 2018/19 sales, I’m of the opinion the USDA will continue to raise its export sales projection slightly in proceeding Crop reports.
  • Conab recently lowered its forecast yet again for Brazil’s 2017/18 corn crop to 81.3 MMT, which is due primarily to sharply lower safrinha corn production (down 12.8 MMT or -19% versus the previous year). Remembering again that Brazil’s 2017/18 safrinha corn crop has just been harvested and accounts for a sizable percentage of Brazil’s available corn exports. The U.S. continues to take advantage of Brazil’s production shortfall in the export market.

 BEARISH Pricing Indicators:

  • On Tuesday Informa Economics released its initial 2019 U.S. planted acreage estimates. In corn Informa forecasted 2019 U.S. planted corn acreage of 93.04 million acres, up 3.9 million acres versus 2018. Additionally, Informa’s 2019/20 U.S. corn production estimate was 15.256 billion bushels (yield of 178 bpa). If realized this would represent a new record high for U.S. corn production, exceeding the current record of 15.148 billion bushels from 2016/17. 
  • Early yield reports in a number of key corn producing states are essentially validating the USDA’s September U.S. corn yield forecast of 181.3 bpa. Obviously an emphasis should be placed on the word “early” however it’s going to be hard for the market to ignore some of the nearly unbelievable field averages already filling up email Inboxes, as well as, being advertised on Twitter. This will only feed the narrative that the USDA will likely increase its 2018/19 U.S. corn yield forecast again in the October 2018 WASDE report. Crop scout Michael Cordonnier raised his U.S. corn yield estimate to 182 bpa earlier

SHORT-TERM PRICE OUTLOOK:  Corn futures recovered late in the week. Last year’s CZ harvest low was $3.35 ½. This week CZ already traded down to $3.42 ½. I still have no desire to get short under $3.50 with 2018/19 U.S. corn ending stocks substantially lower than 2017/18.

 

NATIONAL SOYBEANS RECAP

BULLISH Pricing Indicators:

  • On Tuesday Informa Economics released its initial 2019 U.S. planted acreage estimates. In soybeans Informa forecasted 2019 U.S. planted soybean acreage of 82.27 million acres, down 7.3 million acres versus 2018. Additionally, Informa’s 2019/20 U.S. soybean production estimate was 4.161 billion bushels (yield of 51 bpa); down 532 million bushels from 2018/19. Significantly lowering 2019 U.S. soybean acreage is the first step in helping bring U.S. soybean ending stocks back into balance. Obviously there’s no quick fix for Soybean Bulls and current record high 2018/19 U.S. soybean ending stocks of 845 million bushels; however materially lowering next year’s acreage base can accelerate this process greatly and at the very least stop the bleeding with November soybean futures trading in the low $8.00 range. 

BEARISH Pricing Indicators:

  • On Monday and Tuesday the U.S. and China traded tariff jabs once again with Trump initiating another $200 billion in tariffs on Chinese goods and China retaliating with another $60 billion in tariffs on U.S. goods. The new Chinese levies were aimed primarily at U.S. farm products/machinery and chemicals. They will take effect on September 24th, the same day the latest U.S. penalties are set to kick in. November soybean futures responded to the news by trading down to a new contract low of $8.12 ¼ on Tuesday morning. 
  • 2018/19 Brazil soybean production is expected to eclipse last year’s record total. In the September 2018 WASDE report the USDA forecasted 2018/19 Brazil soybean production at 120.5 MMT, up slightly from last year’s production figure of 119.5 MMT. Crop scout Michael Cordonnier is anticipating a 3.5% increase in Brazil’s planted soybean acreage (36.3 million hectares or 89.6 million acres). It’s also been reported that Parana is off to its fastest soybean planting pace in the last 5-years (Parana = 2nd largest state producer in Brazil). Mato Grosso started planting soybeans this week (Mato Grosso = largest state producer in Brazil). No issues to speak of yet for Brazil’s 2018/19 soybean crop…

SHORT-TERM PRICE OUTLOOK:  November soybean futures made a new contract low on Tuesday ($8.12 ¼); however managed to rally back the 2nd half of the week. Similar to corn…at some point even Bear markets have topside recoveries and right now I believe the most “negative” news has been priced in with soybeans already trading at their lowest level since December 2008.


DECEMBER 2018 CORN FUTURES

CZ8 TECHNICAL ANALYSIS CZ8 FUTURES DATE
Friday Close $3.5725 9/21/2018
Previous Friday Close $3.5175 9/14/2018
  Current Contract Low $3.425 9/18/2018
     
  KEY RESISTANCE CZ8 FUTURES  

20-Day Moving Average

$3.58  
50-Day Moving Average $3.661  
     
  KEY SUPPORT CZ8 FUTURES  
9/18/2018 Day Low $3.425  
8/31/2017 Day Low(CU17) $3.285
 

NOVEMBER 2018 SOYBEAN FUTURES


 
SX8 TECHNICAL ANALYSIS SX8 FUTURES DATE
Friday Close $8.4725 9/21/2018
Previous Friday Close $8.305 9/14/2018
Current Contract Low $8.1225 9/18/2018
     
  KEY RESISTANCE SX8 FUTURES  
35-Day Moving Average $8.584  
50-Day Moving Average $8.630  
     
  KEY SUPPORT SX8 FUTURES  
20-Day Moving Average $8.38  
9/18/2018 Day Low $8.1225  


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.