The Grains Complex II,III



Today in history, 1945, the Soviet Union announced the fall of Berlin and the Allies announced the surrender of Nazi troops in Italy and parts of Austria.



Yesterday in economic news, the Institute for Supply Management reported that its index of manufacturing sectors activity fell from 59.2 in March to 57.3 in April. All else equal still a robust print for the ISM, however, a minor disappointment for the Street where expectations were for 59.

The News Orders Index registered 61.2 percent, a decrease of 0.7 percentage points from the March reading of 61.9 percent. The Production Index registered 57.2 percent, a 3.8 percentage point decrease compared to the March reading of 61 percent. The Employment Index registered 54.2 percent, a decrease of 3.1 percentage points from the March reading of 57.3 percent.  – Mr. Timothy R. Fiore, ISM’s economist. 

In addition to the ISM, the Commerce Department reported that construction spending fell 1.7% in March and that too was a modest disappointment for the consensus. However, mitigating those concerns was that February’s 0.1% rise was revised upward to 1.0%. Important to note that Private construction spending fell 2.1% while spending on private residential projects fell 3.5%, nonetheless, construction spending rose 3.6% on an annualized basis.


Outside Markets: Crude Oil is $67.40, up 15 cents per barrel despite larger API crude oil stocks last night. The API report did suggest lower diesel inventory in today’s EIA report. Gold is $1311.10, up $4.30 per ounce from yesterday. The US Dollar index (BUXX version) is slightly weaker this morning.

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Overnight stocks Aussie stocks were higher on good Qantas numbers.

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The Japanese Nikkei Index was lower on weak autos. In Hong Kong, real estate and financials were pressured during the session. Chinese PMI came in better than expected. U.K. politics are still in a tumulous state as Prime Minister May could face an ultimatum from her conservative party members over an E.U. customs association.

In the market, Eurodollar, “second bearish black crow”, closed for the first time below the important long moving average which is at 127.17 and also the 50% Fib retracement level of 120.53. Resistance 127.17, 120.53, & at 121.02. Support 119.35, 119.14, & 118.57.

Cable, “a long black mariposaa”, closed below its most recent 50% Fib retracement level at 1.37. Cable is now reaching its long average moving support at 1.3538. Resistance 1.3654, 1.37 , & 1.38. Support 1.3538, 1.3488, & 1.3460.

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April GDD accumulation is moot for most of the Corn Belt, as the seed was still in the bag for most of the month. Had it been planted, development is behind, because heat units are running 60 to 120 behind normal as we begin May.


Corn futures are currently a penny per bushel lower after since ending the Tuesday session with most contracts 4 to 5 cents higher. Preliminary open interest data suggests net new buying, with OI up 31,786 contracts for the day. Much of that was in the July contract. The monthly Grain Crush report from the USDA showed that 472.912 mbu of corn was used for ethanol production in March. That is 9.1% larger than March and 2.72% above last year. On Monday evening, NASS reported that IA and NE planting progress improved to 17% complete, lagging their respective averages of 27% and 24%. In other parts of the Corn Belt, IL was at 32%, with IN at 8% and OH at 1% planted, all well below the average pace. There were 569 deliveries vs. May futures overnight, with the oldest long now up to April 27.

Corn futures are fractionally mixed so far on Wednesday. This morning’s report from the EIA showed ethanol production for the week of April 27 totaling 1.032 million barrels per day. That was 47,000 bpd above the previous week. Stocks of ethanol totaled 22.142 million barrels, 441,000 more than the week prior, with the Midwest the only region to show a reduction.

May 18 Corn is at $3.96, down 3/4 cent,
Jul 18 Corn is at $4.05 1/2, down 1/4 cent,
Sep 18 Corn is at $4.13, up 1/4 cent
Dec 18 Corn is at $4.20 1/4, unch

Chart Points: The weekly continuation chart took out the 2017 high at $3.945. Round number resistance at $4 is the next concern for the bulls. We are also operating under a triangle breakout to the upside, with counts in the $4.20’s. These apply to May futures until expiration. July contract has a Gann 1×4 resistance line at $4.05 3/4 .. If we can clear that area, the Fibonacci expansion count is up  around $4.18. Bollinger midline support is $3.95. December futures have rising regression channel support at $4.055. The quants would be expected to sell it in the $4.23’s if given the opportunity.

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Soybean futures are mostly 4 to 5 cents lower this morning. They ended Turnaround Tuesday with most contracts 4 to 5 3/4 cents higher with help from meal. Soy meal posted life of contract highs and was up $10.90/ton, with front month soy oil 27 points lower. Tuesday afternoon’s USDA Fats & Oils crush report indicated soybean processors crushed a record 182.16 mbu of soybeans during March, just shy of trade estimates. That was a 10.43% jump from February (thanks to more processing days) and 13.32% larger than last March. Combined soy oil stocks at the end of February were slightly larger than expectations at 2.44 billion pounds.

Soybean futures are mostly 6 to 7 cents lower at midday. Soy meal is down 30 cents/ton, with front-month soy oil up 33 pointsBrazil soybean production is expected hit 117 MMT for 17/18 according to estimates from INTL FCStone, up 1.1 MMT from their April projection.

May 18 Soybeans are at $10.36 1/4, down 6 1/4 cents,
Jul 18 Soybeans are at $10.46 1/2, down 6 3/4 cents,
Aug 18 Soybeans are at $10.49 1/2, down 6 cents,
Sep 18 Soybeans are at $10.45 3/4, down 7 cents,
May 18 Soybean Meal is at $402.70, down $0.30
May 18 Soybean Oil is at $30.41, up $0.33

Chart Points: Downtrend resistance is at $10.65 on the weekly continuation chart. The Bollinger midline support is $10.17 1/4. These numbers still apply to May futures. Weekly stochastics are neutral. The 100-day moving average support on the July chart is $10.26 3/4. Overhead trendline resistance is near $10.72. Stochastics are neutral. The November contract has lateral resistance at $10.60. Regression channel support is $10.28 3/4. The upper Bollinger Band resistance held the market on Monday and is resistance today @ $10.565.

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Chart Points Soy Meal: Spot meal futures traded at the highest price since July 2016 yesterday. May futures resistance is $404.90. July contract stochastics are bullish. Prices set a new life of contract high overnight and held the triangle breakout. The measured move would be $38/ton if the breakout is sustained, i.e. to $423! Uptrend support is $377.10. MACD is bullish, as shown in the July chart snippet below.

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Wheat futures are trading roughly 3 cents lower this morning in all three markets. They saw gains of 13 to 18 cents in the CBT and KC contracts on Tuesday. MPLS was up 8 to 10 cents. Money coming in at the beginning of the month helped fuel the rally. Preliminary open interest for the Chicago SRW market was up 8,238 contracts. There have still been no deliveries vs. May Chicago futures, with the oldest long dating back to April 4.  The annual HRW wheat quality tour began yesterday with reports confirming much of the known drought stress and delayed development in the crop. The first-day tour average was 38.2 bpa, below both the 5-year average and year ago. Kansas is typically 24% headed at this point, with USDA showing only 2% so far. AR and TX are the only states to be ahead of the normal heading pace. Winter wheat conditions in KS were steady this past week, with OK deteriorating 7 points and TX up 8. The spring wheat crop in MN is just 2% planted with the average at 34, and ND just 3% vs. the normal pace of 22%.

Wheat futures are trading 3 to 4 cents higher in most contracts, with nearby CBT 1/2 lower on thin trade. The Export Sales report will be released tomorrow morning. The annual HRW wheat quality tour began yesterday with reports confirming much of the known drought stress and delayed development in the crop. The first-day tour average was 38.2 bpa, below both the 5-year average and year ago. Dryness in Australia and the Black Sea region is supportive.

May 18 CBOT Wheat is at $5.29 1/4, down 1/2 cent,
May 18 KCBT Wheat is at $5.36 1/4, up 4 cents,
May 18 MGEX Wheat is at $6.31, up 3 3/4 cents

KCBT HRW WHEAT Chart Points: Downtrend resistance on the weekly continuation chart is at $5.255. Bollinger midline support is $4.77 3/4. These apply to May futures. May futures broke Bollinger midline resistance to the upside. There is a trendline at $5.30 as resistance. Stochastics are bullish for July futures. The main resistance is a downtrend line at $5.37. The upper Bollinger Band resistance is $5.58. The March high was $5.65. Stochastics are overbought and looking for an excuse to sell off. Rising ADX says to pay more attention to MACD. The trend is your friend.

CBT SRW WHEAT Chart Points: The weekly continuation chart has lateral resistance at $5.06 ó. Moving average support this week is $4.60 3/4 and applies to May futures. The May daily chart rallied past the 2018 high at $5.185 and posted the highest price since August. July futures have 100-day moving average support down at $4.76. Lateral resistance is $5.31 3/4.

MGE Chart Points: The weekly chart shows a bounce from the 100-week moving average support at $5.80 and a gap above the 40-week moving average resistance at $6.205. That still applies to the vapor thin May contract. September futures bounced nicely from the 78.6% Fib retracement support @ $6.00 3/4. The 40-day average at $6.19 . was broken to the upside. RSI is bull friendly. The main overhead resistance line is at $6.43.



Live cattle futures settled the day with most contracts 27.5 to 70 cents lower. Feeder cattle futures were down $1.50 to $2.725 on Tuesday. The CME feeder cattle index was down 4 cents on April 30 at $139.27. Wholesale boxed beef values were higher on Tuesday afternoon. Choice boxes were up $2.01 at $226.43, with Select boxes $2.30 higher at $207.09. Estimated weekly FI cattle slaughter through Tuesday was 236,000 head, down 1,000 head from last week but 15,000 larger than the same week in 2017.

Live cattle futures are currently 17.5 to 80 cents higher on Wednesday, with nearby June down 50 cents. Feeder cattle futures are up 10 to 35 cents at midday.This morning’s FCE online auction saw sales on 413 of the 2,982 head at an average price of $122.40.

Jun 18 Cattle are at $105.325, down $0.500,
Aug 18 Cattle are at $104.100, up $0.025,
Oct 18 Cattle are at $107.750, up $0.675,
May 18 Feeder Cattle are at $138.000, up $0.100
Aug 18 Feeder Cattle are at $143.825, up $0.350
Sep 18 Feeder Cattle are at $144.775, up $0.250

Cattle Chart Points: Weekly chart support is now $104.05 with June the lead month. A back adjusted weekly continuation chart (067, shown below and useful in expiration gap situations) puts the 18-week moving average resistance at $109.80. The June daily chart is in a rising regression channel, with support near $104.67 and resistance at $107.92. That is the 50% retracement. The main bull argument for June is that it is discounting a $20 drop in cash cattle. The bear argument is that a 45-week cycle low is due in July, +/- 4 weeks. August futures resistance is the 40-day moving average at $105.62. Stochastics are neutral, with ADX declining. Regression channel support at $103.27 held on Tuesday.

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Feeder Cattle Chart Points: The weekly chart shows a bounce from the 78.6% retracement and lower Bollinger Band. Resistance is $142.75 and $146.57, the 18 and 40-week moving averages respectively. Weekly chart RSI is neutral. The 100-day moving average resistance for the May chart is $143.47 and rejected Monday’s rally attempt. A bearish divergence in the stochastics was left behind. The lower Bollinger Band support is $134.85. Regression channel support for August futures is $143.90. The pivot point for today is $144.42, with S1 support at $142.20.

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Lean Hogs

Lean hog futures finished with gains of 15 cents to $1.20 in the front months on Tuesday, with back months lower. The CME Lean Hog Index was up 45 cents from the previous day to $62.20 on April 27. The USDA pork carcass cutout value was up 43 cents at $69.16 Tuesday afternoon. The national base hog weighted average price was 50 cents higher at $58.86. The USDA estimated weekly FI hog slaughter at 924,000 head through Tuesday. That is 4,000 fewer than last week but well above this week last year.

Lean hog futures are mostly 20 to 70 cents lower at midday on Wednesday. The CME Lean Hog Index was up 25 cents from the previous day to $62.45 on April 30. The USDA pork carcass cutout value was up $1.69 at $70.58 this morning, with just the ham reported lower. The national base hog weighted average price was 55 cents lower at $58.33.

May 18 Hogs are at $66.800, down $0.650,
Jun 18 Hogs are at $73.200, down $0.700
Jul 18 Hogs are at $75.750, down $0.275

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Cotton futures are trading 7 to 19 points higher this morning. They were mixed on Tuesday, with front months 42 to 64 points higher and a few deferred contracts lower. The Tuesday Cotton systems report by the USDA showed 2,156 RB of extra long staple cotton consumed in the US during March. That was 8.6% below last year and 1.4% lower than February. Stocks were seen at 3,200 RB, up 27.9% from a year ago. The ICAC expects 18/19 world cotton ending stocks of 18.28 MMT. That is up 350,000 MT from last month’s estimate mainly on larger 17/18 carryover. The Cotlook A index was up another 25 points from the previous day on April 28 to 93.70 cents/lb. The Adjusted World Price was updated to 74.25 cents/lb this morning, 9 points above the previous week.

Cotton futures are mixed at midday with back months lower with nearby May down 2 points on low volume. Interest rates are expected to stay UNCH ahead of this afternoon’s Federal Reserve announcement.

May 18 Cotton is at 85.1, down 2 points,
Jul 18 Cotton is at 84.56, up 8 points
Dec 18 Cotton is at 79.200, up 40 points

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Brugler Marketing & Management, LLC

Institute for Management Supply 



Quantas Investor Relations 



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