Market Summary. Commitment of. Traders. Managed Money. Fund Positions

Transcription

1 June 1, 2018 Market Summary NASS issued the initial corn crop rating on Tuesday afternoon with a lofty 79% GD/EX being reported for corn. This is the second highest starting point in history. May warmth has helped to accelerate early growth, but record or near record temperatures extending into June combined with light precipitation could make this number hard to maintain. Early crop ratings are a poor indicator of final yield, but the trend in the ratings can certainly influence perception in the market. US/China trade Summit which started on Friday will extend into the weekend. Ahead of the summit, it appeared that relations were getting strained once again. This warming and cooling of relations/rhetoric continues to give traders heartburn as they try to assess the most recent headlines for impact on US commodity demand. Export demand remains strong for US corn, although we did start to see Argentina emerge as a contender for global corn trade business for later in the summer. The US is still the market for nearby world needs. Brazil remains very stressed for their second season corn crop and expectations are that the US will have to lower their Brazil corn production estimate further. Possibly by as much as 5-7 mmt or 200 to 300 mln bushels which would support 2018/19 US corn exports. Dryness in Russia/Ukraine is also seen reducing global wheat production. The headline is friendly, but in reality traders know that there is more than adequate supply of wheat in the world. Weather in the US and World seen as friendly. Crop ratings in US seen as negative.for now Demand is seen as friendly (excluding trade war ramifications) Potential trade war seen as negative. Potential tariff avoidance seen as supportive Expectation for tighter carryout next year provides underlying support, but not a bullish driver unless conditions deteriorate in the US summer crop. Surplus old crop US stocks limits the upside. Trade needs to see June 29th revisions to planted acreage estimates and forecasts for late June into July before getting next fundamental market driver. Headlines related to China trade negotiations and NAFTA negotiations likely to be the market driver early next week. As of: 5/29/18 Long/ Short Inside this issue Weekly Price Change... 2 Drought Monitor Day Precip... 4 Planting Progress Day Day... 5 Exports... 6 Technicals.7 Commitment of Corn Traders Managed Money Fund Positions Soybeans Wheat +202K +107K +15k Change +2K +9K +17K

2 Weekly Price Change: 6/1/2018 PRICE CHANGE % CHANGE CORN July $3.91 1/2 -$.14 1/2-3.6% SOYBEANS July $ /4 -$.20 1/4-1.9% WHEAT July $5.23 1/4 -$.19 3/4-3.6% FEEDER CATTLE Aug $ $ % LIVE CATTLE Aug $ $ % LEAN HOGS July $ $ % WTI CRUDE OIL $ $ % US DOLLAR INDEX % DJIA % 2

3 US Drought Monitor Very little change this week. Some dryness increases seen in Texas, North Dakota, and a small area in South Dakota. Improvement seen in Northwestern Kansas. 3

4 7 Day GFS Precipitation Forecast US Planting Progress Overall planting progress pegged at 92%, slightly above the 5 yr average. MI 17% behing avg Initial crop ratings at 79% Good/ Excellent was very high and could be hard to maintain. 4

5 6 to 10 Day Forecast Precipitation Temperature Precipitation 8 to 14 Day Forecast Temperature 5

6 Exports Sales Weekly export sales were at 39MM bushels, which brings total marketing year commitments to 2.143B bushels. Exports now need to only average 5.8MM bushels per week to achieve the USDA s 2.225B bushel export estimate. Export Inspections Weekly export inspections were 67MM bushels which marks the 9th consecutive week of export shipments surpassing what is needed to achieve the USDA s 2.225B bushel estimate. Export shipments need to average 53.5MM bushels/ week for the remaining 14 weeks of the crop year to achieve B Bushels. 6 6

7 Technical Analysis It was a very ugly week from a chart perspective for July corn, as price tried to rally on the reopen of the overnight session on Monday evening, but closed lower on the day and continued lower into Friday s close. Price has now violated the lower support level of the uptrend, with the next target at $3.87 which is the 50-day moving average on the weekly chart. The 20 day moving average at $3.97 will likely act as upside resistance on any attempt to bounce. A big concern for the bulls is that MACD is curling lower, and hasn t crossed negatively since the rally began in February. 7