Grain futures are mixed in the overnight and early morning trade as traders gear up for Friday’s USDA report.
Check out Oliver Sloup on CME Group talk on Corn volatility remains near 6-month high
Corn
Technicals (May)
May corn futures were weaker in Tuesday’s trade, but it wasn’t enough to do any serious technical damage. Support remains intact from 421-422, the Bulls need to defend this pocket to prevent a potential retest of the February 26th lows. On the resistance side, the Bulls need to clear the hurdle that comes in from 429 1/2-433 1/4. If they can achieve that it could spark another illusive short covering rally that could take prices up to the next upside objective, 440-441.
Bias: Neutral/Bullish
Resistance: 429 1/2-433 1/4, 440-441
Pivot: 421-422
Support: 415-416*, 398-402
Fundamental Notes
Brazilian corn production estimates will be in focus for Friday’s WASDE report. The average estimate comes in at 121.95 MMT, that is 2.05 less than the USDA’s February report and well below last year’s 137.
Once we get past Friday’s report, we’ll start hearing more estimates for the end of the month reports which will include quarterly stocks and prospective plantings. Which also means the US Drought monitor will start coming on the scene. Of the Cornbelt, Iowa currently has the most widespread drought concerns.
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 soybean futures were lower in yesterday’s trade following Monday’s reversal after failing against trendline resistance. Despite being roughly 10 cents off the high from Monday, there hasn’t been any significant technical damage done to the chart. Resistance remains intact from 1163-1168. If the Bulls can chew through and close above that pocket, we believe it could provide a short covering rally into what has been a historically friendly time of year.
Bias: Neutral/Bullish
Resistance: 1163-1168, 1184*, 1198-1205 1/2
Support: 1125-1130**
Fundamental Notes
The USDA has been slow to make any significant adjustments for Brazilian soybean production (relative to many other analysts), part of the reason may be the fact that the USDA had initially underestimated the Brazilian crop over the last 4-years. However, this year seems to have come with another set of weather issues. With harvest over 50% complete will they have the data to make the move? The average analyst estimate for Brazilian soybean production comes in at 152.8 MMT, that would be down from the 156 the USDA estimated in February.
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. See the table below.
*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)
Wheat futures broke to new lows yesterday which has led to additional weakness in the overnight and early morning trade. With the market in uncharted territory there aren’t any support levels that have a historical basis to them. Typically, we like to look at charts as roadmaps of previous interactions between buyers and sellers, when we are at new lows (or new highs) we can’t see that, making it much harder to find significant levels.
Bias: Neutral
Resistance: 573-578, 595 3/4-600, 608 1/2-611**
Pivot: 550-555
Support: 525**
Fundamental Notes
Wheat inspections totaled 353,137 tons, 17% lower for the current marketing year versus last year.
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.
US Ending Stocks
