Grain markets weaker in the early morning trade, testing important support levels. Will it hold through today’s trade and into Friday’s WASDE report?
Corn
Tuesday’s Recap
Corn futures were higher Tuesday with the Dec contract finishing the session at a one week high of 418’4, gaining 2’0. Across all maturities, 333,551 contracts were traded, with 167,928 done in the Dec maturity. Combined open interest decreased by 8,903, or 0.53%, to 1,672,868. Dec shed 16,839 (2.51%), finishing at 654,411.
Technicals
Corn futures were lower in the overnight trade but were able to defend our pivot pocket, keeping it intact from 413-416 for today’s trade. If the Bulls can chew through resistance from 419 3/4-420 we could see it spark additional momentum back to 425-426 1/2, which will act as a more significant price pocket. Consecutive closes above here would likely but the Bulls in control of the technical landscape.
Technical Levels of Importance
Resistance: 419 3/4-420, 425-426 1/2***
Pivot:413-416
Support: 409-410, 397-401 1/4****
Popular Options
Option trading centered around the Dec 430 calls with 10,475 done and the Dec 400 puts with volume of 6,846. Option open interest is greatest for the Dec 430 calls at 45,600, and the Dec 400 puts at 37,875.
Volatility Update
Implied Volatility ended the session moderately up with CVL adding 0.19, to finish at a one week high of 19.88. Off 0.12% to a one-month low, historical volatility (as measured by the 30-day) settled at 15.80%. The CVL Skew ended the session moderately down, dropping by 0.19 to finish at 0.47.
Fundamental Notes
Tuesday Morning Flash Sales
- 124,000 metric tons (4,881,663 bushels) of corn for delivery to unknown destinations during the 2024/2025 marketing year.
WASDE Estimates
- Yield: 183.7 Bushels Per Acre
- Production: 15.189 Billion Bushels
- US Ending Stocks: 1.946 Billion Bushels
Weekly Ethanol Report Estimates
- Production: 1.077 million barrels per day
- Stockpiles: 21.876 million
Seasonal Tendencies Update
Below is a look at historical price averages for March corn futures on a 5, 10, 15, 20, and 30 year time frames (Past performance is not necessarily indicative of future results). The chart seems to indicate that November can be a tough time for the market to stage a meaningful rally. Whether or not that plays true this year is TBD.
Commitment of Traders Update
Friday’s Commitment of Traders report showed funds were net buyers of nearly 54k contracts, trimming their net short position to 17.7k, the smallest net short position since August of 2023.
Wheat
Tuesday’s Recap
Tuesday’s Wheat market was mostly higher in a quiet session, with the Dec contract higher by 3’6 to 572’4. Total volume was 117,846, with the Dec maturity seeing 58,641 done. Overall open interest finished the day at a one month high of 444,271, adding 3,983, or 0.90%. Dec open interest fell 4,493 (2.25%), to 195,329.
Technicals
December wheat futures are weaker in the early morning trade but remain in their recent range. Support remains intact from 557 1/2-560 1/2. A break and close below there and we could see the selling accelerate. On the resistance side, the Bulls want to see a close out above 582 3/4-585 1/2 to spark a rally back above $6.00. As mentioned previously, with the market setting up to be what looks like a coinflip, we like looking at options as a tool to gain exposure.
Technical Levels of Importance
Resistance: 596-600, 615-617 1/2, 629 1/2-634
Pivot: 582 3/4-585 1/2
Support: 557 1/2-560 1/2, 544 1/4***
Popular Options
Option volumes were highest for the Dec 620 call (1,012) and the March 530 put (1,233). Calls with the greatest open interest are the Dec 600 strike (7,935), and for the puts are the Dec 550 strike (7,468).
Volatility Update
Implied Volatility closed slightly higher with WVL up 0.039, to finish the session at 28.91. Down by 0.68% to a one month low, historical volatility (as measured by the 30-day) ended at 22.56%. The WVL Skew was slightly up with the 30-day higher by 0.052, closing at a one week high of 5.90.
Fundamental Notes
WASDE Estimates
- US Ending Stocks: 813 Million Bushels
Seasonal Tendencies Update
Below is a look at historical price averages for March wheat futures on a 5, 10, 15, 20, and 30 year time frames (Past performance is not necessarily indicative of future results).
Commitment of Traders Update
Friday’s Commitment of Traders report showed another week of little change on the CoT. Funds were net sellers of about 2.2k contracts which puts them net short 31k.
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