Corn and wheat futures remain steady in the overnight and early morning trade while soybeans show weakness as caution flags arise. A few different trade setups have caught our eye this week, here’s what we are looking at.
Corn
News
- The rapid finish is likely to provide the market early supplies but may lower crop quality or reduce grain yields.
- Because Monday was a Holiday, weekly export sales have been pushed back to Friday morning.
Technicals (December)
Absolutely nothing has changed on the technical landscape which keeps the levels and our thesis intact, that being that this is an environment with abundant opportunities for shorter term traders on both sides of the market. The market tested but failed against our pivot pocket yesterday, we’ve had that defined as 489-491. If the Bulls can chew through that resistance, it could encourage some short covering towards the psychologically significant $5.00 level. Implied Volatility closed moderately lower yesterday with CVL (corn volatility index) dropping 0.43, to finish the day at a one month low of 25.11. The 30-day historical volatility settled off by 1.25% to a one month low of 25.68%. If you believe that the market is building up energy for a bigger directional move (potentially after next week’s USDA report) you could consider looking to the options market. Feel free to reach out to the trade desk for a tailored strategy, 312-278-0500.
Bias: Neutral/Bullish
Resistance: 497 1/2**, 502-506 1/2***, 518-525 3/4****
Pivot: 489-491
Support: 472-476****, 460-464 1/2**
Seasonal Tendencies
Below is a look at seasonal averages for December corn. The 5-year seasonal average suggests seasonal consolidation while longer term averages continue to trend lower into harvest.
Soybeans
News
- Because Monday was a Holiday, weekly export sales have been pushed back to Friday morning.
- Yesterday was the first day in over a week that we didn’t get any reports from private exporters.
- Temperatures look to moderate in the coming weeks. Has the damage already been done, that’s the big question.
Technicals (November)
Soybeans are continuing to consolidate as time is taking us closer to trendline support. The recent weather concerns and string of flash sales have been able to keep the market afloat, but we’d say that with that type of news “afloat” is a disappointment. This raises a near term caution flag for us. Over the last 24-hours we’ve been shopping in the options market for clients who share that caution and need downside protection or want to express a bearish opinion in the market. Feel free to reach out to the trade desk for a tailored strategy, 312-278-0500.
Bias: Neutral
Resistance: 1390 1/2-1392**, 1409 1/2**, 1428-1435****
Pivot: 1373-1381
Support: 1350-1355***, 1331**
Seasonal Tendencies
Below is a look at seasonal averages for November soybeans. Seasonal tendencies have shown consolidation into the middle of September, but that turns to weakness in the back half of the month.
Wheat
News
- Concerns continue to grow about dry weather threatening production in export hubs like Australia.
- Australia’s wheat output is forecast to drop 36% from last year as dry weather curbs yields. The Australian Bureau of Agricultural and Resource Economics and Sciences trimmed its crop outlook by 800,000 metric tons to 25.4 million tons.
- Because Monday was a Holiday, weekly export sales have been pushed back to Friday morning.
Technicals (December)
The wheat market has been able to stabilize this week which has moved our short-term bias into outright Bullish territory. The Bulls need to achieve consecutive closes above 608 1/4-612 to spark a bigger short covering rally. A failure to do so and a close back below support from 595-599 1/2 would Neutralize that short term bias. Options continue to be a great tool when looking at entering a counter trend trade. Feel free to reach out to the trade desk for a tailored strategy, 312-278-0500.
Bias: Bullish
Resistance: 643 1/2-646 1/4****, 677 1/4-682 1/4***
Pivot: 608 1/4-612
Support: 595-599 1/2**
Seasonal Tendencies
Below is a look at seasonal averages for December Chicago wheat. We are inching closer to a seasonal low (based on historical tendencies). Will that play out again this year? TBD.
