CORN (July)
Last Week’s Close: July corn futures finished Friday’s session up 6 ¾ cents which put prices up 5 cents for the week. Friday’s Commitment of Traders report showed that funds sold 21,374 futures from May 8th-May 15th, this shrinks their net long position to 184,773 futures.
Fundamentals: The grain markets got a nice bid on the Sunday night open after reports that China will be importing more agricultural products from the United States, nearly a reversal from what others had in mind. Treasury Secretary Steven Mnuchin said they expect to see an increase of 35-45% this year alone. The USDA will release their weekly crop progress report after the close today. Analysts are expecting to see corn come in from 75-80% planted, this would be up from the 62% in last week’s report. Weather will continue to be very important here in the states as the crop continues to get in the ground and starts to develop. The lack of meaningful moisture in Brazil continues to raise questions about the yield.
Technicals: The market held technical support last week perfectly, we had defined that as 394 ¼-397 ¼. This pocket represents a key retracement on the year, along with the 50-day moving average. The inability to breakdown invited buyers into the market. With the positive news over the weekend, the market is now testing the top end of the range. Key technical resistance comes in from 407-408 ½. If you have been long the market this would be a spot to look at reducing or hedging if you’re a producer. A break and close above this pocket gives the bulls a green light to give this market another leg higher. With that said, the volume overnight has been light, the bulls need to see confirmation through volume on the floor open.
Bias: Bullish
Resistance: 407-408 ½***, 425 ¾-426 ½**
Support: 394 ¼-397 ¼***, 390 ½**, 379 ½-383 ½****
SOYBEANS (July)
Last Week’s Close: July soybean futures finished Friday’s session up 5 ¼ cents which helped trim the loses for the week to just 4 ¼ cents. Friday’s Commitment of Traders report showed that funds sold 21,393 futures contracts, this puts their net long back to 101,072 futures. Keep in mind that this is for May 8th-May 15th.
Fundamentals: We got a good old-fashioned gap open Sunday night on news that China is open to increasing imports from the United States. This comes after concerns last week that the two countries would not come to a trade agreement anytime soon which was followed by export cancellations. The USDA will release their weekly crop progress report this afternoon. Analyst are expecting to see 50-55% of the crop planted, this would be up from last week’s 35%. Weather will continue to be important but any “flash headlines” with regards to trade/China will have bigger near-term implications.
Technicals: The market traded technically sound last week as it found and held our 4-star support pocket which we have had outlined as 988 ¾-994 ¾. As mentioned in last week’s report “this pocket represents an area for shorts to cover and buyers to find value”. The market is trading higher on positive news which has the market trading right back at the 200-day moving average. The significant resistance pocket comes in from 1026 ½-1028 ¼, the bears remain in control until the market achieves a conviction close above this pocket. This pocket represents the 100-day moving average, the 50% retracement on the years range, along with previously important price points.
Bias: Bearish/Neutral
Resistance: 1026 ½-1028 ¼***, 1040-1042 ½**
Pivot: 1013
Support: 988 ¾-994 ¾****, 965 ¼-969 ½***
WHEAT (July)
Last Week’s Close: July wheat futures finished 20 ¾ cents higher on Friday which was also the net gain on the week. Friday’s Commitment of Traders report showed that funds were sellers of 14,154 futures contracts, this puts their net short position at 1,569. Keep in mind that this data is from May 8th-May 15th.
Fundamentals: Wheat futures caught a massive bid on Friday on continued concerns over the dry weather and effects on production. The USDA will release their weekly crop progress report after the close this afternoon. Not much change is expected for winter wheat. Spring wheat is estimated to be 80% planted, this would be up from last week’s 58%. The rallying USD has not had any major effects on price recently, but if it continues to surge, it may keep a lid on any significant rallies.
Technicals: July wheat futures are testing the 50% retracement from the highs last July to the lows this past December, that comes in at 523. If the bulls achieve a conviction close above this pocket, we could see a continuation towards 543 ½. A close below opens the door for a run back at the $5 handle. The market has been constructive over the last two months, posting higher lows and higher highs.
Bias: Bearish/Neutral
Resistance: 523-524 ¼**, 543 ½-545***
Support: 502 ¾-505 ¾***, 477 ½-482 ¾****, 467 ¾**
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