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Commodity market research – Quarterly Stocks – Acreage – DAW Trading – BrokersEDGE 6-29-18

Published Jun-29-2018

Last Trades:

LEQ8: .775 at 103.50, trading in a range of 1.675

LEV8: .80 at 106.95, trading in a range of 1.40

GFQ8: 1.025 at 146.80, trading in a range of 2.10

GFU8: .825 at 147.30, trading in a range of 1.975

 

Cattle Commentary: Cattle futures finished the day on higher ground but with little conviction. The market made it’s high for the day at 9:30cst, which we have been noting as a time where volume dries up and the market comes back frequently over the last month. For clients who are more active, this is a trading opportunity to capitalize on a bounce from technical support. If the market clears 103.75-104.00, we could see an extension towards 105.35-105.50. That is the top end of the range, and we would look to be sellers on the first test. Cash trade continued to come in today, ranging anywhere from 105-108.

PM Boxed Beef / Choice / Select

Current Cutout Values: / 213.24 / 200.66

Change from prior day: / (2.06) / (.22)

Choice/Select spread: / 12.58

 

Live Cattle (August)

Resistance: 103.75-104.00**, 104.90**, 105.375-105.525****

Support: 101.65-101.90***, 100.05-100.40****

 

Feeder Cattle (August)

Resistance: 147.95-148.425**, 150.275-150.75***

Support: 144.90-145.50**, 142.175-143.00****

 

Lean Hog Commentary and Technicals (August)

Resistance: 76.90-77.25***, 77.70-78.30

Support: 73.275-74.00****, 70.10-70.55***

 

 

 

 

 
E-mini S&P (September)

Yesterday’s close: Settled at 2719.50, up 14.50

Fundamentals: Major U.S benchmarks pared early losses yesterday to notch a solid session to which they extended gains overnight. The S&P traded to a high of 2737.50 and is being led by the banks after yesterday’s post-bell stress test results; pre-market the XLF is up nearly 1% and JP Morgan and Bank of America are both up more than 1.5%. However, it seemed to be a deal reached between EU leaders with little details late last night that jolted equity markets through Thursday’s session highs. Upon this news the Euro spiked nearly a penny and knocked the Dollar Index off the highest level since last July. As we regularly point out, a strong Dollar weighs on multinationals and this brought relief. Sticking to Europe, Germany’s parliament approved an aid package for Greece this morning; the DAX is leading the way +1%. Today marks the end of the second quarter and little to no fresh news on U.S and China trade tensions has also been a positive. However, this morning it was said President Trump is looking to reevaluate status with the World Trade Organization and this knocked the S&P from session highs. Still, an announcement from the White House on restrictions on Chinese investment in the U.S is pending and should lead to a very volatile session. Without a clear answer heading into the weekend and as investors and portfolio managers eye the July 4th holiday on Wednesday there is a high probability we see risk-off ahead of the bell and the close of Q2.

This morning’s data includes the Fed’s preferred inflation indicator, PCE. IT is expected to come in at 1.9% YoY and is accompanied by figures on Personal Spending, Income and Consumption. Chicago PMI is due at 8:45 am CT and Michigan Consumer data is due at 9:00 am CT. Lastly, tonight at 8:00 pm CT, Chinese Manufacturing and Non-Manufacturing PMI will be released.

Technicals: Yesterday’s early low of 2693.25 was poked at twice making three tests in total to key support at 2695.75 before shorts began covering. The session was quiet with little to no news and the tape consolidated higher before squeezing shorts and just as we said here and on our Midday Market Minute video, a move out above resistance at 2717.25-2721 should get legs. Once out above there, price action could not get back below, and this will mark a crucial turning point on the session if retested. This is now defined by first key support at 2720.50 and above here the bulls have an immediate-term edge, below there is 2715.25-2716.75 and this would be a turning point on the session where the bears can quickly regain the driver’s seat and take it lower. Key resistance at 2735.75-2737 held in the early hours of this morning and will act as a barrier through today. Above here, the probability of a sell-off begins reducing, and a move out above major three-star resistance at 2745.50-2748.50 should see further gains.

Bias: Bearish/Neutral

Resistance: 2735.75-2737**, 2745.50-2748.25***, 2759.50**, 2768.50-2773**

Support: 2720.50**, 2715.25-2716.75**, 2709-2710**, 2703.50*, 2693.25-2695.75***, 2679.25**, 2670.25-2672.50****, 2664***

 

 

Crude Oil (August)

Yesterday’s close: Settled at 73.45, up 0.69

Fundamentals: Crude Oil remains strong and yesterday it settled at the highest level of the year and the highest since November 2014. The risk remains to the upside and the fear of a supply deficit later this year is driving sentiment. Outages in Venezuela, Libya and Canada alone could have supported prices this week. However, coupled with the largest draw since September 2016, the July 4th holiday week and of course the White House’s demand that countries stop importing Iranian Crude by November or face sanctions has ripped this market by more than $10 in less than two weeks. Saudi Arabia plans on ramping up production next month but demand continues to grow and comments from the Saudi Energy Minister that we could see a supply deficit of 1.8 mbpd later this year sits fresh in the minds. For demand, analysts expect it to increase by nearly 1 mbpd through 2019.

Technicals: This is a technical breakout above new highs on the year, but Crude Oil must maintain this on a closing basis. Resistance does come in at 74.75-75.00 but a continued close above 72.90 truly keeps the path targeting our next major three-star level at 76.50. However, a close below 72.35-72.90 would cause a quick wave of profit taking and selling down near $70. It is key to manage risk at these levels until the market proves a consolidation pattern and build support above 72.90.

Bias: Bullish/Neutral

Resistance: 74.75-75.00**, 76.50***, 80.00****

Pivot: 72.35-72.90****

Support: 71.52-71.62*, 70.87**, 69.97-70.13***

 

 

Gold (August)

Yesterday’s close: Settled at 1251, down 5.1

Fundamentals: The Dollar Index is weaker on Euro strength but the story for Gold remains more dependent on the Dollar/Yuan relationship. The good news is that it has retreated from its six-month high, however, the Hang Seng and Shanghai Composite are both up 1.5% and 2% which means little demand for safe haven assets. The table is set for Gold though, the currency markets are providing a small light at the end of the tunnel. Most crucial this morning will be PCE due at 7:30 am CT. This is the Fed’s preferred inflation indicator and will be accompanied by figures on Personal Spending, Income and Consumption. Chicago PMI is due at 8:45 am CT and Michigan Consumer data is due at 9:00 am CT. Lastly, tonight at 8:00 pm CT, Chinese Manufacturing and Non-Manufacturing PMI will be released.

Technicals: The Technicals remain cut and dry here for Gold, buyers must show up here at our rare major four-star support that is being tested. A close above 1262.5 would help stop the bleeding but truly, we need to see a close above major three-star resistance at 1272.1-1274.4 in order to neutralize the immediate-term downtrend.

Bias: Neutral/Bullish

Resistance: 1262.5**, 1272.1-1274.4***, 1279.9**, 1286.8-1287.7**, 1295.8***, 1305.5-1313***

Support: 1238.3-1250****

CORN (December)

Yesterday’s Close: Corn futures finished yesterday’s session down 7 cents, trading in a range of 7 ½ cents. Funds were estimated sellers of 13,000 contracts.

Fundamentals: Today is the day! We will get new news from the USDA at 11am cst, regarding planted acres and quarterly stocks.

 

Corn Acres

Range of Estimates: 85.5-89.4 million acres

Average Estimate: 88.4 million acres

March Report: 88.0 million acres

 

Quarterly Stocks

Range of Estimates: 5.004-5.500 billion bushels

Average Estimate: 5.276 billion bushels

March Report 8.888 billion bushels

Once we get this report behind us, attention will turn right back towards weather and trade.

 

Technicals: Yesterday’s selloff into the close was gut wrenching for the bulls left in this market. Though we are stabilizing in the overnight and early morning trade, we would not be surprised to see the market soften, shaking out the weak longs. The chart is a technical graveyard, and the bulls have A LOT of work to do before they can begin feeling comfortable. A conviction close back above 376 ¼-379 ¼ would be one small step for bulls, one giant leap in repairing the chart.

Bias: Neutral

Resistance: 376 ¼-379 ¼****, 387 ¾**, 397 ½-399 ¼****

Support: 359-360 ½****, 345 ½-350****

 

SOYBEANS (November)

Yesterday’s Close: November soybean futures finished yesterday’s session down 4 ¾ cents, trading in a range of 10 ½ cents. Funds were estimated sellers of 5,000 contracts on the session.

Fundamentals: Bullish market participants are hoping for a repeat of last year’s report where we saw beans rally $1.05 ¼ in the 12 sessions following the report.

Soybean Acres

Range of Estimates: 89.1-90.6 million acres

Average Estimate: 89.7 million acres

March Report: 89 million acres

 

Quarterly Stocks

Range of Estimates: .965-1.305 billion bushels

Average Estimate: 1.204 billion bushels

March Report 2.107 billion bushels

Once the market digests today’s numbers, attention will turn back to weather and trade talks with China. We are expecting to hear something more concrete within the next week regarding trade.

 

Technicals: This is one of the uglier charts out there, there’s no doubt about it. The inability to garner additional short covering after last Friday’s close was a big caution flag that has prompted a buyers strike this week. The market remains in oversold territory with an RSI (relative strength index) of 22.35. We are expecting a volatile trade on the release of the report and would not count out the possibility of a stop hunt below the June 19th lows of 864 ½. Bulls need to reclaim the $9.00 handle from a psychological perspective, but the more significant pocket comes in from 921 ¾-923 ½. If the bulls can achieve a close above this pocket in the next week, we would expect that to spur additional short covering.

Bias: Neutral

Resistance: 897 ¾-901 ¾***, 921 ¾-923 ½****, 935-939 ½***

Support: 882 ½**, 857-864****, 844 ¼**, 825****

 

WHEAT (September)

Yesterday’s Close: September wheat futures finished yesterday’s session down 5 cents, trading in a range of 10 cents on the day. Funds were estimated sellers of 4,000 contracts.

Fundamentals: All eyes will be on this morning’s USDA report, out at 11 am cst. We will also be watching the reaction of corn and beans as there could be some spillover price action.

Wheat Acres

Range of Estimates: 46.7-47.7 million acres

Average Estimate: 47.2 million acres

March Report: 47.3 million acres

 

Quarterly Stocks

Range of Estimates: 1.042-1.200 billion bushels

Average Estimate: 1.101 billion bushels

March Report 1.494 billion bushels

Technicals: The market is consolidating near the low end of the range as traders wait for new news to give us a technical breakout or break down. Our support pocket from 175 ¾-480 remains intact, a close below could open the flood gates for a swift move lower, our next support pocket comes in at 450 ½-454 ¾. On the resistance side of things, the bulls want to reclaim ground above 496 ¼-500 to encourage another move higher. This pocket represents a key Fibonacci retracement and the 200 day moving average.

Bias: Neutral/Bearish

Resistance: 496 ¼-500***, 510 ½-513 ½****, 523***

Support: 475 ¾-480***, 450 ½-454 ¾****

 

 

If you have any questions about the commodity futures and options markets, trading or opening an account please let us know!

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at https://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.

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