Short covering was a theme in last week’s grain trade, will it continue this week?
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Corn
Technicals (July)
July corn futures have nestled in near our pivot pocket, which we’ve outlined in recent reports as 448-451. So long as the Bulls can defend this pocket on a closing basis, we see upside potential. A failure here would start to neutralize that short term bias as it would open the door for a retest of support from 441 3/4-444 1/2. Stiff resistance comes in from 456 1/2-460, if the Bulls can chew through and close above this pocket we believe it would trigger a bigger wave of short covering. The CME Corn CVOL index, a measure of volatility, is at 24.7. For reference, that would be near the lows of last year at this time. Generally, we see volatility rise through May and June, which may make long options more appealing leading into that. Trading is not a one size fits all deal, so if you would like to discuss different strategies that would be suitable for you, feel free to reach out to our trade desk: 312-278-0500.
Bias: Bullish/Neutral
Resistance: 456 1/2-460****, 471-471 1/2***
Pivot: 448-451
Support: 441 3/4-444 1/2***, 433 1/4-436****, 422 1/4-424 1/4***
Below is an updated look at seasonal tendencies for December corn futures.
*past performance is not necessarily indicative of future results
Below is an updated look at the weekly Commitment of Traders report. Friday’s report showed Funds were net buyers of roughly 41k futures and options contracts, with nearly 80% of that being short covering. Funds are now net short 238,546 futures and options contracts. Broken down that is about 409k shorts VS about 170k longs. This is a level where the selling of Funds started to snowball, it’ll be interesting to see if this is where more short covering picks up (if we can get out above some nearby resistance levels).
Soybeans
Technicals (July)
July soybean futures spent the back half of last week consolidating, which all in all is constructive. We continue to see prices lingering near resistance from 1182 1/4-1186 1/4. We’ve been a little cautious on soybeans, but a break and close above this pocket could spur another leg higher with the next upside objective coming in from 1199 1/2-1204. Sometimes it’s best to just tune out the noise and trade the chart.
Bias: Neutral
Resistance: 1182 1/4-1186 1/4, 1199 1/2-1204
Pivot: 1169 1/4-1173 1/2
Support: 1150-1155, 1140 1/4-1145 3/4**
Below is an updated look at seasonal tendencies for November soybean futures.
*past performance is not necessarily indicative of future results
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