Grain futures had a strong finish to yesterday’s trade which has helped spur additional upward momentum in the early morning trade as Funds feel the squeeze to exit short positions.
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Corn
Technicals (May)
May corn futures have been able to defend trendline support throughout the week which has helped prices push back up against resistance and the 50-day moving average, which we haven’t seen a close above since October 23rd! If the Bulls can chew through and close above here, we could see another wave of short covering take place in a similar way we saw when prices broke out above the 20-day moving average.
Bias: Bullish
Resistance: 447 1/2-450****
Pivot: 441 3/4-444 1/2
Support: 431 1/2-433 1/4*, 421-422
Fundamental Notes
- There’s been a lot of talk about hot and dry weather, but in Argentina the concern over damaging rains is helping aid the relief in futures prices over the last 24 hours.
- Yesterday’s EIA Ethanol report showed production at 1.046 mbpd (million barrels per day), that’s nearly 5% more compared to the same period last year.
- The range of estimates for this morning’s weekly export sales report comes in from 800,000-1,400,000 metric tons. Last week’s was reported at 1,283,000 metric tons.
Fund Positioning
- Friday’s Commitment of Traders report showed that Funds were net buyers of roughly 40.8k futures/options contracts, 37.5k of that being short covering. That trims their net short position to 255,928 contracts. For those wondering where prices are when Funds were that short on the way down, May corn was at 453 3/4 and Dec was at 477 1/4.
Seasonal Trends
(Past performance is not necessarily indicative of future results)
- Below is a look at price averages for December corn, using the 5, 10, 15, 20, and 30 year averages. Though we believe we can see prices firm from these levels, we would urge Producers to temper the expectations, given the current balance sheet.
Soybeans
Technicals (May)
May soybean futures broke and closed above the 50-day moving average in yesterday’s trade, the first time since early in December. That momentum has spilled over into the early morning trade with prices trading as high as 1226 3/4 last night. The momentum is in the Bull’s favor as Funds with a historically large net short position may be starting to feel more of a squeeze, which can become self-fulfilling at times. Previous resistance will now be support, that comes in from 1198-1205 1/2.
Bias: Bullish/Neutral
Resistance: 1240 1/2, 1250-1252
Pivot: 1212 3/4-1216
Support: 1198-1205 1/2, 1184-1188*, 1161-1167
Fundamental Notes
- Concerns over excessive rain and potential crop damage in Argentina has helped spur some of the move higher we’ve seen in the last 24 hours, this will continue to be monitored closely.
- Export sales will be out at 7:30am CT. Expectations range from 250,000-800,000 metric tons.
Fund Positioning
- Friday’s Commitment of Traders report showed Funds have officially ended their record selling streak which totaled 16 straight weeks! The recent report showed Funds were net buyers of about 17k contracts, 13k of which was short covering. That trims their net short position to 155,137 futures/options contracts. Broken down that is 56,290 longs VS 211,427 shorts.
Seasonal Trends
(Past performance is not necessarily indicative of future results)
- Below is a look at price averages for November soybeans, using the 5, 10, 15, 20, and 30 year averages.
Wheat
Technicals (May)
Wheat futures have been a bit of a dud recently but with they could stand to benefit from renewed optimism in the corn and soybean markets. Resistance continues to be tested from 550-555. If the Bulls can pacman through this pocket, we could see the momentum help press prices up near our next resistance pocket from 563-570.
Bias: Neutral/Bullish
Resistance: 563-570, 595 3/4-600, 608 1/2-611**
Pivot: 550-555
Support: 525**
Fundamental Notes
- Weekly export sales estimates range from 200,000-500,000 metric tons. Last week’s was a disappointing 83,804mt.
- The US Dollar had a bearish reversal yesterday following the Federal Reserve meeting. If weakness persists there, it could be a tailwind for wheat futures.
Fund Positioning
- Friday’s Commitment of Traders report showed funds were net sellers of roughly 13k futures/options contracts, 12k of which was long liquidation. Funds are now net short 78,870 contracts. For reference, they were net short 120k contracts in November.
Seasonal Trends
(Past performance is not necessarily indicative of future results)
- Below is a look at price averages for July wheat, using the 5, 10, 15, 20, and 30 year averages. Historically this isn’t the most friendly time of year.
