Grains
CORN (December)
Yesterday’s Close: December corn futures traded down a penny yesterday, trading in a narrow range of 2 ½ cent range on the day. Funds were estimated sellers of 5,000 contracts.
Fundamentals: Yesterday morning’s export inspections came in at 444,648 metric tons, this was below the low end of the expected range from 500,000-700,000 metric tons. Yesterday afternoons crop progress report showed that corn is 70% harvested, this is in line with expectations but still lagging the five-year average by 13%. The three major laggards (in terms of %) are Colorado -26%, Wisconsin -26%, and Minnesota -27%. The focus for the remainder of the week will likely be on Thursdays USDA report which will be released at 11 am cst. The average analyst estimates for yields come in at 172.4 bushels per acre, this is up .6 from the last WASDE report (World Agricultural Supply and Demand Estimates). Post report, attention will move to South America where planting rolls onwards and the crop starts to develop.
Technicals: There is not much new to bring to the table with the market continuing to trade in such a narrow range. The 50-day moving average remains first resistance and has been trending lower for the last three months (starting to flatten out), that comes in at 351 ¼ this morning. The bulls have not been able to achieve a close above this indicator since July. The next line in the sand and more significant resistance level is 355 ¼, a conviction close above could encourage funds to cover a portion of their large short position. On the support side of things, the bulls want to defend last week’s lows at 345 ¼. If they can hold off the bears here, the chart will hold higher lows for the second time since the contract lows of 342 ½ on October 12th. We remain neutral as we patiently wait for a breakout or breakdown, preferably with a fundamental catalyst behind the move (potentially this week’s report).
Bias: Neutral
Resistance: 351 ¼**, 355¼***, 360-362***, 372-375**
Support: 342 ½-345 ¼**, 334-335 ½***
SOYBEANS (January)
Yesterday’s Close: January soybean futures traded 7 ¾ cents higher yesterday, trading in a 10 ¾ cent range on the session. Funds were estimated buyers of 3,500 contracts.
Fundamentals: Yesterday morning’s export inspections came in at 2,490,600 metric tons, this was within the range of expectations from 2,300,000-2,800,000 metric tons. Yesterday’s crop progress report showed soybeans are 90% harvested, in line with expectations and just 1% behind the five-year average; impressive after a slow start. Attention will start moving towards South American crop development, but first on the agenda will be Thursdays WASDE report (World Agricultural Supply and Demand Estimates). The average analyst estimate is for yields to come in at 49.3 bushels per acre, this would be a decrease of .6 bushels per acre from the October WASDE report. We will have a convenience table for you before and after the report.
Technicals: The market held trendline support and the 50% Fibonacci very well to start the week, that support pocket came in from 984 ¾-987. As mentioned previously, we see a lot of technical support down to 978 ¾. The 50, 100, and 200 day moving average all come in between 978 ¾-980 ¾. Our bias will remain bullish until the market breaks down below these moving averages. If the market breaks down below these levels, we could see long liquidation down towards 968 ¼. On the resistance side of things, 999 ¼-1004 ¾ remains the big barrier for bulls. A conviction close above could open the door for funds to extend their net long position and push prices towards 1021 ½.
Bias: Bullish
Resistance: 999 ¼-1004 ¾**, 1014**, 1021 ¼****
Support: 984 ¾-987**,978 ¾-980 ¾***, 968 ¼****, 957-963 ¼****
WHEAT (December)
Yesterday’s Close: December wheat futures finished Mondays session up 4 ¾ cents higher than Fridays last trade. Funds were estimated to have been buyers of 6,000 contracts on the day.
Fundamentals: Yesterday morning’s export inspections came in at 248,293 metric tons, this was towards the low end of the expected range from 250,000-450,000 metric tons. Iraq has been showing an appetite which has helped, but the market will need to see consistent and widespread demand in an effort to turn the ship. Crop progress came out after the close and showed 55% of winter wheat is in good/excellent condition, this was slightly better than what some were expecting and up 3% from the previous week. We have a USDA report out on Thursday at 11am cst which will have price implications. Spillover price action from corn and beans could be the driver for wheat.
Technicals: Wheat futures managed to trade higher to start the week on what was likely short covering. We continue to have a bearish bias until a close above technical resistance. That resistance level comes in at 438 ¼ this morning. This represents the 50-day moving average, an indicator we have not seen the market close above since July. If the market can achieve a close above, we could see the funds start to cover their shorts. The trend is your friend, and the trend has been lower highs and lower lows. First support comes in at 422 ½ which is the old contract lows, a break below that will likely lead to new contract lows and a push below 415.
Bias: Bearish
Resistance: 438 ¼** 443***, 462 ¾**, 478-479****
Support:422 ½**, 415 ¼**, 399-402 ¾****, 390-392 ¼**
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