Corn and soybean futures prices are firm to start the week as traders, hedgers, and other market participants look to position ahead of Friday’s USDA report.
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Corn
Technicals (May)
May corn futures struggled against resistance from 249 1/2-433 1/4 at the end of last week’s trade which keeps that resistance pocket intact to start the week. This resistance pocket represents previous support in the middle of February and the eventual breakdown point from February 21st. This pocket also contains the 20-day moving average which is the blue line in the chart below. If the market can chew through and close above this pocket, we could see that trigger another round of short covering propel prices up near 440. On the flipside, the Bulls will want to defend our pivot pocket from 421-422.
Bias: Neutral/Bullish
Resistance: 429 1/2-433 1/4* 440*
Pivot: 421-422
Support: 415-416*, 398-402
Fundamental Notes
Mato Grosso is estimated to be over 90% planted for their Safrinha crop, keeping weather in South America on the top of minds.
There is a USDA report out on Friday, we will have estimates out by midweek. Looking past that, the quarterly stocks and prospective plantings report at the end of the month will the big-ticket item this month.
Seasonal Tendencies
(updated on Mondays)
Below is a look at historical seasonal 5, 10, 15, 20, and 30 year averages for May corn futures (updated each Monday) VS today’s prices (black line). Seasonally we see that corn has shown the ability to chop around in a mostly sideways trade from the first half of March up into the back half of April.
*Past performance is not necessarily indicative of futures results.
Below is a look at the last 5-years for May corn, which shows the three most recent years were able to stabilize and firm into April, while 2019 and 2020 prices continued to trickle lower during the same time frame.
Fund Positioning
(updated on Mondays)
Friday’s Commitment of Traders report showed Funds were net buyers of 45,475 futures and options contracts, broken down we see that 35,441 of that was short covering and 10,034 was new longs. That shrinks their net short position to 295,258 contracts, still one of the largest net short positions on record.
Soybeans
Technicals (May)
May soybeans had an impressive end to last week’s trade with prices closing at their highest levels of the week. That momentum has spilled over into the Sunday night and Monday morning trade as prices are once again threatening trendline resistance near 1160, which is derived from the January 25th high. If the Bulls can keep the momentum going, the next upside objective would be the 20-day moving average near 1172. We have not seen the market close above this moving average since November 22nd.
Bias: Neutral/Bullish
Resistance: 1172-1176, 1198-1205 1/2
Pivot: 1160-1163
Support: 1125-1130**
Fundamental Notes
Brazil is estimated to be near 50% of the way through soybean harvest, while Mato Grosso is estimated to be over 85% of the way through harvest.
There is a USDA report out on Friday, we will have estimates out by midweek. The USDA has been slow playing adjustments to Brazilian production relative to other analysts, but perhaps now that harvest data is available we could see those estimates converge.
Seasonal Tendencies
Seasonal tendencies have been out the window to start the year, so I’m not sure how much weight one puts into them at this juncture, but seasonally we tend to see some consolidation and strength from the middle of March to the middle of April.
*Past performance is not necessarily indicative of futures results.
MRCI shows back tested results for a bullish seasonal that starts on March 17th and goes through April 21st. They show this as bullish for 13 of the last 15 years with the average rally being about 56 cents and the average loss being about 37 cents.
*Past performance is not necessarily indicative of futures results.
Commitment of Traders Snapshot
(updated on Mondays)
Friday’s Commitment of Traders report showed yet another week of net selling by Funds, extending their net short position to 160,653 futures and options contracts. That’s an increase of 23,975 contracts, 20,576 of which were new short positions.
Wheat
Technicals (May)
May Chicago wheat futures are skating on thin ice this morning, testing the lows from two weeks ago which come in from 553 1/2-555. A break and close below this pocket puts prices back into uncharted territory, making it more difficult to find the next meaningful support pocket. The Bulls will not only want to defend support but also gain ground back above our pivot pocket from 573-578 to help carve out a near term low.
Bias: Neutral
Resistance: 595 3/4-600*, 608 1/2-611
Pivot: 573-578
Support: 550-555**, 525
Fundamental Notes
There is a USDA report out on Friday, we will have estimates out by midweek.
The US Dollar remains near the upper end of the 2-month range, but is showing signs of softening recently. If confirmed, that could be a tailwind to wheat futures.
Seasonal Tendencies
Below is a look at historical seasonal averages for May Chicago wheat futures VS this year’s price (black line), updated each Monday. As you can see, seasonal tendencies start to soften up in the back half of March.
*Past performance is not necessarily indicative of futures results.
Commitment of Traders Snapshot
(updated on Mondays)
Friday’s Commitment of Traders report showed little change in the Managed Money net position. Funds are seen to be net short about 56k futures/options contracts.
