A lack of bullishness has led to a buyers strike and a technical breakdown in the grain markets. How much more downside is there?
Grain Technicals Give Way
Grain markets were lower to start the week on continued pressure from last week’s WASDE report. The weakness has broken chart support which may put the Bears back in the driver’s seat. Check out yesterday’s video!
Soybeans
Monday’s Recap
Nov Soybean futures finished at a one month low of 996’0 Monday, losing 9’4. Overall the session saw a heavy 328,221 contracts done, with Nov volume coming in at 165,943. Combined open interest settled at a contract high of 928,662, up by 18,157, or 1.99%. Nov open interest fell 1,282 (0.40%), to 315,766.
Technicals
Soybeans were under pressure yesterday, closing a tick above the low end of our 4-star support pocket which we’ve outlined as 995 3/4-1001 1/4. This will now act as a bit of a pivot pocket as the Bears are in clear control. If prices to fail to achieve consecutive closes back above this pocket we would not be surprised to see a retest of the August lows near 955, a level we talked about in Friday’s Ag Day TV interview. Despite the roughly 70 cent pullback since the start of the month, the RSI is still above what is considered to be oversold.
Technical Levels of Importance
Resistance: 1010-1011 1/2, 1024 1/2 – 1027 1/2
Pivot: 995 3/4-1001 1/4
Support: 972 3/4-975, 955-957 1/4*
Popular Options
Option volumes were largest for the Nov 1050 call (4,670) and the Nov 800 put (12,980). Calls with the largest open interest are the Nov 1040 strike (21,003), and for the puts are the Nov 1000 strike (23,421).
Volatility Update
Implied Volatility closed the day sharply up with SVL adding 0.84, to finish at 18.58. The 30-day historical volatility closed the session dropping 0.18% to a one week low of 18.04%. The SVL Skew closed the session slightly lower, off 0.03 to finish at a one week low of 0.83.
Fundamental Notes
- Brazil soybean planting reached 8.2% complete as of October 10th, that VS 4.5% a week earlier and 17% a year before. This is the slowest pace since the 2020/2021 crop.
- September soybean crush is estimated to be near 170 million bushels, this would be 2.7% higher than last September and an increase of 7.6% from last month. Oil stocks are estimated to be at 1.111b lbs VS 1.108b last year. The NOPA crush report will be released later this morning.
- China reported September soybean imports of 11.371m tons. Soybean imports YTD are up 8.1% to 81.849m tons.
- Due to yesterday’s Columbus Day holiday, export inspections and crop progress will be released today.
Corn
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Wheat
Monday’s Recap
Dec Wheat futures settled at a one week low of 585’2 Monday, down by 13’6 (2.30%). Overall, 92,562 contracts changed hands, with 55,970 traded in Dec. Total open interest closed at a one month high of 394,942, adding 1,471 (0.37%). Dec open interest shed 382, or 0.19%, to 201,234.
Technicals
December Chicago wheat futures broke below trendline support yesterday which took prices near our support pocket from 582 3/4-584 1/4. Prices are currently under that pocket, and if that continues to be the case through the 8:30 open, we could see the selling accelerate. We’ve been optimistic on wheat for the better part of the last month but yesterday’s trade certain changed that bias, coupled with a lower high from Friday’s trade.
Technical Levels of Importance
Resistance: 596-600, 615-617 1/2, 629 1/2-634
Pivot: 582 3/4-584 1/4
Support: 573 3/4**, 560 1/2-565 3/4
Popular Options
Option volumes were greatest for the Dec 650 call (1,183) and the Nov 570 put (964). Calls with the greatest open interest are the Dec 600 strike (7,314), and for the puts are the Dec 550 strike (6,702).
Volatility Update
As measured by WVL, implied volatility finished the day moderately lower, dropping 0.29 to settle at a one week low of 30.07. The 30-day historical volatility finished the day losing 0.0087% to 25.38%. The WVL Skew closed the session lower, off by 0.38 to end at 5.89, a one week low.
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