News

September 28, 2018

 

 

NATIONAL CORN RECAP

BULLISH Pricing Indicators:

  • U.S. Corn Export Demand Remains Strong ---- U.S. weekly corn export inspections for the week ending Thursday, September 20th totaled 49.7 million bushels. Corn inspections for the first 3 weeks of September are up 39% from the previous year (117.2 million bushels versus 84.5 million bushels). In the September 2018 WASDE report the USDA forecasted 2018/19 U.S. corn exports of 2.4 billion bushels, down 25 million bushels versus 2017/18. Given the accelerated early sales/inspections pace I have to believe the USDA will consider raising its 2018/19 U.S. corn export figure in the October WASDE report.
  • This week the dialogue surrounding early harvest results from key corn producing states such Iowa and Illinois shifted to “variable.” Monday’s Crop Progress report showed that 28% of Illinois’s corn crop has now been harvested versus just 5% in Iowa. Obviously it’s early…however the reality is for Illinois to achieve a state wide average yield of 214 bpa, as the USDA indicated in its September Crop Production report, they can’t have too much variability across the state (ditto Iowa at 206 bpa). It feels like the onus is now squarely on actual harvest results validating the USDA’s record state corn yield estimates from September (“prove it” mentality).

 BEARISH Pricing Indicators:

  • Monday’s Crop Progress report showed the U.S. corn good-to-excellent rating up 1% week-on-week, improving to 69% versus 61% a year ago. From a ratings standpoint the market has yet to see any indication that the USDA has potentially substantially over-estimated the U.S. corn yield even at 181.3 bpa. If anything the state good-to-excellent ratings in IL, IA, and others since the release of the September WASDE report have essentially doubled-down on the USDA’s recent record yield projections. For example, since the beginning of September Illinois’s good-to-excellent rating in corn has improved from 75% to 79%.
  • On Friday the USDA released its September Grain Stocks report. In that report Sep 1 Corn Stocks were estimated at 2.140 billion bushels. This was substantially higher than the average trade guess of 2.010 billion bushels. Essentially what that will do is raise the USDA’s 2017/18 U.S. corn ending stocks figure to 2.140 billion bushels in the October 2018 WASDE report versus its September forecast of 2.002 billion bushels.

SHORT-TERM PRICE OUTLOOK:  Corn futures failed to hold key price support on Friday. CZ18 appears range bound between $3.45 and $3.65 for the time being.


 

NATIONAL SOYBEANS RECAP

BULLISH Pricing Indicators:

  • Technical momentum remains up in November soybeans (even inclusive of Friday’s 9 ½-cents per bushel lower close). This despite really no fundamental (S&D-related) market support. I have read however that Argentina has looked to source U.S. soybeans, as an offset to Argentine sales to China. It’s possible this becomes the mechanism to get around China’s 25% on U.S. soybeans…

BEARISH Pricing Indicators:

  • The early soybean planting pace in Brazil is off to an excellent, accelerated start. AgRural reported that soybean planting in Parana is off to a record fast pace with 11.2% of the soybean crop planted versus 1.7% last year and the 5-year average of 1.9%. Parana is the 2nd largest soybean producing state in Brazil. Soybean planting progress in Mato Grosso is also off to a good start. Mato Grosso is the largest soybean producing state in Brazil. Good, early season soil moisture has allowed both states to begin planting soybeans as soon as possible. The long-term market influence of early soybean planting in Brazil means an early harvest and increased export competition for the U.S.
  • Thursday’s Weekly Export Sales report showed U.S. soybean export sales of 32 million bushels for the week ending 9/20/2018. Crop-year to date U.S. soybean export sales were reported at just 690.0 million bushels versus 819.9 million bushels a year ago. That’s a difference of -129.9 million bushels or -16%. Crop-year to date U.S. soybean shipments are also down -18% versus a year ago. The market is starting to see the actual impact of China reducing its purchases of U.S. soybeans.
  • Reuters reported this week that Chinese importers have booked a record 12 to 14 MMT of Brazilian soybeans for October-November arrival. Typically the U.S. dominates the world soybean export market from October through March (until Brazil harvests and is able to transport its new-crop soybeans to the appropriate export channels/ports). It’s been reported that Chinese importers fear the consequences of buying U.S. soybeans.
  • The USDA’s Sep 1 soybean stocks projection was higher than expected coming in at 438 million bushels versus the average trade guess of 401 million and the USDA’s latest 2017/18 U.S. soybeans ending stocks forecast of 395 million bushels. This will raise 2018/19 U.S. soybeans carryin stocks 43 million bushels in the October 2018 WASDE report.

SHORT-TERM PRICE OUTLOOK:  November soybean futures need to hold the 20-Day moving average at $8.395 early next week to preserve the current uptrend.



DECEMBER 2018 CORN FUTURES

CZ8 TECHNICAL ANALYSIS CZ8 FUTURES DATE
Friday Close $3.5625 9/28/2018
Previous Friday Close $3.5725 9/21/2018
  Current Contract Low $3.425 9/18/2018
     
  KEY RESISTANCE CZ8 FUTURES  

35-Day Moving Average

$3.627  
50-Day Moving Average $3.675  
     
  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 $8.455 9/28/2018
Previous Friday Close $8.4725 9/21/2018
Current Contract Low $8.1225 9/18/2018
     
  KEY RESISTANCE SX8 FUTURES  
35-Day Moving Average $8.504  
50-Day Moving Average $8.625  
     
  KEY SUPPORT SX8 FUTURES  
20-Day Moving Average $8.395  
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.