Yesterday’s USDA report pressured corn and soybeans, but wheat futures were able to stage an impressive reversal higher which has led to additional strength in the early morning trade.
USDA Report Estimates
Scheduled to be released today at 11am CT.
Corn
News
- Hot and dry conditions throughout the grain belt in the back half of summer raised concerns over potential yield declines from some analysts, which was validated to some extent in this report with the USDA cutting yields for both corn and soybeans. The USDA showed a national average corn yield at 173.8 bushels per acre, down from the 175.1 bushels per acre that we saw in last month’s report. Despite a lower yield, production was up slightly from last month due to an increases in harvested acres. There weren’t any significant changes on the demand side of the equation, putting US Ending stocks at a lofty 2.22 billion bushels, which was above the average analyst estimate.
- With this report behind us and weather uncertainty having a diminishing impact on yield potential, we’ve seen corn and soybean CVOL steadily declining since mid-summer, reaching their lowest levels since last spring. Lower volatility may make options more affordable and attractive for those looking to manage risk or to express an opinion in the market.
Technicals (December)
Corn futures broke lower following the release of yesterday’s USDA report, taking prices back near the low end of the range from the last month. So far, the Bulls have been able to defend our 4-star support pocket from 472-476. A break and close below there could accelerate the selling pressure. The Bulls want to see consecutive closes back above 489-491 to encourage further technical momentum. Until then, we believe this is an environment filled with short term opportunities for participants on both sides of the market.
Bias: Neutral
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 (red line in chart below) suggests that the recent consolidation could start to turn into a market bottom. Longer term moving averages on the other hand suggest more weakness in the back half of September.
Soybeans
News
- Soybeans saw yield decline 8/10ths of a bushel from last month, coming in at 50.1 bushels per acre. Harvested acres were increased only slightly which kept overall production estimates below last month’s report. Soybean ending stocks were reported within the range of analyst expectations.
- With this report behind us and weather uncertainty having a diminishing impact on yield potential, we’ve seen corn and soybean CVOL steadily declining since mid-summer, reaching their lowest levels since last spring. Lower volatility may make options more affordable and attractive for those looking to manage risk or to express an opinion in the market.
Technicals (November)
In yesterday’s morning report we noted: “Despite the bullish headlines, we are cautious on beans from these levels as well as from a seasonality standpoint. “. November soybean futures broke below trendline support and the 50-day moving average yesterday which keeps the door open for further technical declines, which also aligns with historical weakness during this time of year. The next support pocket we are eyeing comes in from 1330-1332 1/2. The Bulls need to reclaim ground above 1350-1355 on a closing basis to neutralize yesterday’s technical damage.
Bias: Bearish/Neutral
Resistance: 1373-1381***, 1390 1/2-1392**
Pivot: 1350-1355
Support: 1330-1332 1/2***
Seasonal Tendencies
Below is a look at seasonal averages for November soybeans. Seasonal tendencies have shown weakness through the back half of September for the 5, 10, 15, 20, and 30 year averages, illustrated in the chart below.
Wheat
News
Chicago wheat is on the rise for a second session on Wednesday to extend a rebound from a 33-month low as a lower-than-expected forecast of world supply by the U.S. government shifted attention towards harvest risks in some exporting countries.
Technicals (December)
Yesterday’s reversal off the low was encouraging to see for those who are tilted in the Bullish direction. That reversal has taken prices back into our pivot pocket from 595-599 1/2. If the Bulls can chew through and close above this pocket, the next target would be 612-616. Consecutive closes above that pocket would likely be the catalyst to spark a bigger short covering rally.
Bias: Neutral/Bullish
Resistance: 612-616****, 643 1/2-646 1/4****
Pivot: 595-599 1/2
Support: 585-587, 507**
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.
