Today’s USDA report is often regarded as one of the more meaningful reports of the year which often comes with volatile market reactions. Will we see the same this year?
Short dated options and new crop weekly options can be a great tool to manage risk or take a position ahead of today’s report. The shortened time frame can offer a more cost-effective way to manage risk. Feel free to reach out to our trade desk to discuss potential strategies.
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Corn
Technicals (May)
May corn futures continued to breakdown in yesterday’s trade after failing against resistance last week, putting prices nearly 20 cents off last week’s high and now about 20 cents off the contract low that was posted on February 26th. Today’s report could have some big implications on prices through the spring, so manage your risk accordingly. On top of that, the markets are closed tomorrow which makes today the last trading day of the month and quarter, which could also play a role in price action. At the very least, the Bulls will want to see a close back above our pivot pocket from 431 1/2-435.
Bias: Neutral
Resistance: 441 3/4-444 1/2, 447 1/2-450*
Pivot: 431 1/2-435
Support: 421-422***
Fundamental Notes
- The range of intended corn acres comes in from 90.0-93.472 million acres, with the average estimate being near 91.8 million acres.
- Quarterly stocks estimates range from 8.129-8.568 billion bushels with the average estimate being 8.427. This would be 14% higher year over year and a 5-year high for this time of year.
- Markets will be closed on Friday in observance of Good Friday.
Fund Positioning
- Friday’s Commitment of Traders report showed that Funds were net buyers of roughly 13k futures/options contracts, the bulk of that being short covering. That trims their net short position to 242,988 contracts. Broken down that is 171,123 longs VS 414,111 shorts.
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)
Soybean futures are under slight pressure this morning as prices look to retest the 20-day moving average, which was the origin of the breakout point for the recent run higher. Support from 1175-1181 will be watched closely into and after today’s report, we view this as a MUST HOLD pocket for the Bulls, on a closing basis. A failure to do so could trigger additional technical selling.
Bias: Neutral
Resistance: 1212 3/4-1216, 1240 1/2, 1250-1252***
Pivot: 1198-1205 1/2
Support: 1175-1181, 1161-1167*
Fundamental Notes
- The average estimate for soybean acres comes in near 86.5 million. The range of estimates come in from 85.35-88.0.
- Quarterly stocks estimates range from 1.74-1.986 billion bushels, the average estimate being 1.828. If released it would be 8% higher year over year and a 2-year high for this time of year.
- Markets will be closed on Friday in observance of Good Friday.
Fund Positioning
- Friday’s Commitment of Traders report showed Funds were net buyers of roughly 7k contracts, nearly all of which was short covering. That trims their net short position down to 148,339 futures/options contracts. Broken down that is 56,166 longs VS 204,505 shots.
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)
May Chicago wheat futures were able to find their footing in yesterday’s trade, so far marking a higher low. Whether or not that holds will likely be decided by today’s USDA report. The Bulls want to head into the long weekend with a close out above 550-555 to spark a move towards recent highs which could possibly open the door for higher highs on the back of higher lows. With a big report this morning and a long weekend ahead of us, our bias is outright Neutral. Got a quarter?
Bias: Neutral
Resistance: 563-570, 595 3/4-600, 608 1/2-611**
Pivot: 550-555
Support: 525**
Fundamental Notes
- The average analyst estimates for wheat acres come in near 47.3 million.
- Quarterly stocks are estimated to be near 1.044 billion bushels. this would be an 11% increase year over year and a 3-year high for this time of year.
- Markets will be closed on Friday in observance of Good Friday.
Fund Positioning
- Friday’s Commitment of Traders report showed little change in the Funds net positioning, holding a net short of 80,570 futures/options contracts. Broken down that is 80,721 longs VS 161,291 shorts.
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.
