Market Summary. Commitment of. Traders

Transcription

1 July 13, 2018 The highlight of this week was the July Supply and Demand report issued on Thursday. Specifically, the Demand portion of the report. Old crop Corn stocks were cut by 75 mln to bln. Feed usage was cut by 50 mln, but that was more than offset by increases of 25 mln for ethanol and 100 mln increase in exports. None of these were that surprising, including the export based on the shipment pace we ve seen. Production was adjusted due to the June 29th acreage estimate which added 190 mln bushels to the balance sheet. Corn for ethanol was also dropped by 50 mln bushels and is just 25 mln above this year s number (strange). After that, it was all about demand increases: Feed up 75 mln and exports up 125 mln...the export number makes sense given falling global corn supplies. Global corn carryout was reduced by 107 mln bushels which is 1.5 Bln below this year! It s the tightest global stocks to use in modern history. However, if you exclude China stocks and usage than the Stocks/Use ratio is in the low end of average. This is an important distinction since China does not currently play a significant role in the global corn trade. Market Summary Regardless, the US and Global corn balance sheets are constructive and current board prices, by most people s opinions, would seem to be undervalues or at a minimum not pricing in the normal risk premium that you would expect for the middle of July. Conversely, the soybean balance sheets could not be any more different. New crop carryout was increased by 195 mln to 580 mln bushels compared to old crop at 465 mln. The USDDA made a massive export adjustment lower of 250 mln which was driven by the current trade tariff issues with China. Global soybean stocks increased by 413 mln for next year with a 237 mln bushel cut in demand between this year and next. Production next year was also increased by 156 mln (30 mln from US) with the USDA expecting foreign countries to increase soybean acres with rising soybean values outside of the US. Soybeans are the anchor around corn s neck that will make upside in corn very difficult until something happens on the trade front. As of: 7/10/18 Long/ Short Inside this issue Weekly Price Change... 2 Drought Monitor Day Precip... 4 Crop Condition Day Day... 5 Exports... 6 Technicals.7 Commitment of Corn Traders Managed Money Fund Positions Soybeans Wheat -104K -53K -0k Change -44K -9K +12K

2 Weekly Price Change: 7/13/2018 Price Change % Change Corn Sep $3.41 1/4 -$ % Soybeans Aug $8.18 3/4 -$.58 3/4-6.7% Wheat Sep $4.97 -$.18 1/4-3.5% Feeder Cattle Aug $ $ % Live Cattle Aug $ $ % WTI Crude Oil $ $ % US Dollar Index % DJIA % 2

3 US Drought Monitor 3

4 7 Day GFS Precipitation Forecast US Corn Crop Condition Overall Corn condition rated 75% GD Excellent compared to 65% last year and 5 year average of 71% Crop rating declined 1% thru this past Sunday. We could see a slight decline again this next week. 4

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

6 Exports Sales The USDA increased 17/18 U.S. exports to 2.4B in the latest WASDE report. Weekly export sales were 16MM bushels, which was well below the average trade guess and just 2MM bushels/week above the pace needed to achieve the USDA s 2.4B bushels. Export Inspections Weekly export inspections came in at 57MM bushels week which is roughly 6MM bushels lower than the inspections pace necessary to hit the USDA s 2.4B bushel export estimate. Export inspections have averaged 61MM over the last 60 days but we will need to see continued strength from the export market to continue this trend. 6 6

7 Technical Analysis Chart below is the weekly nearby continuation chart.had to show this to get a decent perspective of how far we ve fallen. Each of the prior three weeks the nearby corn contract had scored lows early in the week before bouncing to finish the week near highs in the $3.60 area. This week, the market instead finished near the low of the week. This week s low of $3.37 1/4 fell below the low from mid June at $3.38 3/4 and the low close from last November also at at $3.38 3/4 before closing at $3.41 1/4. If the market does manage to close below $3.38 3/4 next week it could open the door for a test of the $3.29 area. Looking at the chart, you can see the potential for a bottom to begin to form in corn.but it would sure help if soybeans were able to find a bottom near 2008 levels! (see second chart below for nearby soybean 7