Can Grain Prices Rally Into the Weekend?

Grain futures had impressive reversals higher in Thursday’s trade which has carried over to some early morning strength. Can that continue through today’s trade?

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Corn

Thursday’s Recap
Corn futures were mixed Thursday with the Dec contract finishing the session at 406’6, up by 2’0. Across all maturities, 481,158 contracts changed hands, with 255,482 traded in the Dec maturity. Total open interest ended the day at a one month high of 1,597,014, up by 14,675, or 0.93%. Dec open interest decreased 2,419 (0.32%), to 754,434.

Technicals
Corn futures made new lows for the move, dipping a toe below the physiologically significant $4.00 level, which partly made up our 4-star support pocket from 397-401 1/4. That pocket was able to hold which helped prices bounce back and close higher. The bullish reversal has carried over into strength in the early morning trade with prices flirting with our pivot pocket from 406 1/2-408 1/2. If the Bulls can keep the momentum going and close above here, we could see a retest of the breakdown point from Monday, that comes in from 413-416.

Technical Levels of Importance

• Resistance: 413-416, 425-426 1/2
• Pivot:406 1/2-408 1/2
• Support: 397-401 1/4****

Popular Options
Option trading centered around the March 440 calls with 6,235 traded and the Dec 390 puts with volume of 7,936. Option open interest is greatest for the Dec 430 calls at 29,946, and the Dec 400 puts at 33,474.

Volatility Update
Implied Volatility closed the session up with CVL adding 0.41, to settle at 19.71. The 30-day historical volatility ended the day down by 0.23% to 17.66%. The CVL Skew was sharply higher with the 30-day gaining 0.45, closing the session at a one week high of 0.84.

Fundamental Notes

Two Flash Sales on Thursday Morning

• 197,180 metric tons (7,762,631 bushels) of corn for delivery to Mexico during the 2024/2025 marketing year.
• 101,000 metric tons (3,976,193 bushels) of corn for delivery to unknown destinations during the 2024/2025 marketing year.

Ethanol Report

Yesterday’s EIA report showed ethanol production at 1.042 million barrels per day, that was up 4k barrels per day from the previous week and up 7k from the same period last year. Ethanol stocks rose to 22.27 million barrels.

Mississippi Grain Shipments

• Barge shipments of corn rose 12.6% from the previous week.

Export Sales Expectations

Weekly export sales are expected to come in from 1,200,000 – 2,200,000 metric tons. Last week’s report came in at 1,222,100 MT.

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Soybeans

Thursday’s Recap
Thursday’s Soybean market was mostly higher with the Nov contract higher by 8’6 to 988’6. Combined volume was a heavy 509,093, with the Nov contract seeing 236,377 change hands. Across all maturities, open interest lost 4,992 (0.52%) to 959,126. Nov dropped 19,308, or 6.28%, finishing at 288,106.

Technicals
Soybeans looked like they were destined for new contract lows just 24 hours ago but were able to stage an impressive reversal back to the upside, not jest erasing early morning losses, but also the bulk of the losses from the previous session. The market tested our pivot pocket in the overnight trade but has so far rejected it, that comes inf rom 995 3/4-1001 1/4. If the Bulls can get out above there on a closing basis it could keep the momentum going to our next upside target from 1010-1011 1/2. As mentioned, a few times this week, we wouldn’t be surprised to see the market trade 15 cents +/- on either side of $10 as we inch closer to next Friday’s option expiration, with $10 being a potential magnet. With that thesis in mind, there may be tradable opportunities at the lower and upper bounds of that mentioned range.

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 highest for the Nov 1000 call (6,342) and the Dec 940 put (7,036). Options with the highest open interest are the Nov 1040 call with 19,301, and the Nov 1040 put with 19,207.

Volatility Update
Implied Volatility finished moderately up with SVL higher by 0.24, to close the session at a one week high of 20.63. Historical volatility (30-day) finished at 17.53%, down 0.50%, to a one week low. The SVL Skew finished the day sharply up, higher by 0.48 to close at a one week high of 1.07.

Fundamental Notes

Export Sales Expectations

Weekly export sales are expected to come in from 1,000,000 – 2,200,000 metric tons. Last week’s report came in at 1,264,300 MT.

South American Weather Update from our Friends at Empire Weather LLC

• Bands of showers and storms impacted Rio Grande do Sul northwards to Parana this past weekend with rainfall amounts of 40-80mm fairly common across the region. A bit of a quiet period is underway in S Brazil this week, but shower and storm activity has started to push northwards and is now affecting parts of Parana, Mato Grosso do Sul and Mato Grosso proper through the late week and weekend.
• An active weather pattern is forecast to expand from Parana northward into Sao Paulo and Mato Grosso do Sul through early next week, expanding further towards Mato Grosso proper and surrounding locations from 10/20 onwards. The vast majority of data suggests that above normal precipitation will become common across Central Brazil through late October and continue into early November.
• With the active pattern developing and continuing into early November, temperatures will average just slightly warmer than normal across most areas. The risk for significant heat currently appears limited over the next several days as a result of clouds and rainfall.

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Wheat

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