Grain markets traded sharply lower yesterday morning but managed to find their footing to finish steady to firm on the day. That recovery has spilled into some overnight and early morning strength. Is the low in?
- The Chief Commodities Economist at StoneX Group has his corn yield estimate at 171 bushels per acre, down 2 bushels. With current demand estimates from the USDA that would put ending stocks roughly 400 million bushels over last year. They will release their next producer-based survey on October 2nd. The most recent survey had the corn yield at 175 bpa.
- Conab expects a 9.1% drop in Brazil’s total corn production, to 119.8 million tons, fueled by a predicted 4.8% drop in harvest area to 21.2 million hectares, Conab said in its first forecast for the 2023/2024 cycle.
December corn futures broke lower yesterday morning but were able to stage a *impressive* reversal to finish the higher, settling at the top end of our pivot pocket. If the Bulls can continue to defend 472-476 through today’s trade, it may spark some additional upside momentum. As mentioned in our interview with AgDay TV interview yesterday, a range bound trade, 15 cents on either side of 470 seems like a likely scenario as it stands right now. This could continue to keep our trading thesis alive, which is plenty of opportunity for short term traders on both sides of the market.
Resistance: 489-491***, 502-506 1/2***
Support: 460-464 1/2**
Below is the updated look at historical seasonalities VS today’s prices (black line).
- The Chief Commodities Economist at StoneX Group has his soybean yield estimate at 50.0 bushels per acre, putting ending stocks near the 200 million bushel marker. He noted that additional yield slippage is likely and that he believes exports are too high, but crush estimates are too low. They will release their next producer-based survey on October 2nd. The most recent survey had the soybean yield at 50.1 bpa.
- Conab estimates soybean output to increase by 5.1% to 162.4 million tons, with a 2.8% increase in its production area to 45.3 million hectares.
November soybeans came within a few pennies of our 4-star support pocket, 1300-1304, and were able to stabilize. The Bears have the technical advantage in our opinion, until the Bulls can achieve consecutive closes back above what was previous support, 1330-1332 1/2. A break and close below the technically and psychologically significant $13.00 level could open the door for additional long liquidation with the next downside objective coming in from 1280-1282. This pocket represents the spike low from August 8th as well as the 50% retracement from the May lows to the July highs.
Resistance: 1350-1355***, 1373-1381***
Pivot: 1330-1332 1/2
Below is an updated 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.
- Some analysts are expecting to see further downgrades for the Australia and Canadian wheat crops.
- A cargo vessel carrying 3,000 metric tons of wheat left the Ukrainian port of Chornomorsk on Tuesday for the first time since a grain export deal with Russia collapsed, raising hopes that it would become easier for Ukraine to ship grain. -Reuters
Chicago wheat futures are erasing yesterday’s losses and then some. However, for those of us that have had any remote thought of a Bullish bias over the last month, we take the overnight strength with a grain of salt. As mentioned in yesterday’s interview with AgDay TV, $6 is the psychological barrier we want to close out above but the more technically significant resistance pocket comes in from 612-616.
Resistance: 595-599 1/2***, 612-616****
Below is an updated 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.