CORN (May)
Yesterday’s Close: May corn futures finished the session down 3 ¼ cents, trading in a range of 5 ¼ cents on the day. Funds were estimated sellers of 8,000 contracts.
Fundamentals: Yesterday’s weekly EIA report showed that ethanol production was down 32,000 barrels per day from 1.057 million barrels to 1.025 mbpd. Although this was below the number we saw for the same time last year, production remains ahead of last years overall pace by 2.6%. Export sales this morning came in at 2,505,00 metric tons, this compares to the estimated range from 1,300,000-1,700,000 metric tons. Attention is starting to turn towards acre estimates for the end of the month Prospective Plantings report. Some of those estimates are starting to be released with a private analyst putting US planted corn acres at 88.514 million acres, this would be a bigger drop than most would expect. It will be something to keep a very close eye on going forward. One thing we do know is that the American Farmer loves to plant corn, and they’ve become really good at it too.
Technicals: The market failed to go get things going yesterday which encouraged some long liquidation at the midway point of the week. This after the previous two sessions chopped up the bulls and the bears. The consolidation we are seeing is very healthy for the market, the bulls want to defend 387 on a closing basis to keep the immediate trend in their favor. A breakdown below will likely halt the momentum and encourage additional selling in the near term. Significant support comes in at 379 ½-382 ¾, this is a pocket that could change the overall trend and our bias from bullish to bearish.
Bias: Neutral/Bullish
Resistance: 393 ¾-395 ¼***, 400 ¾-406****, 417 ¼-421 ½**
Support: 387***, 379 ½-382 ¾****, 376-376 ½**, 370 ¼-372 ¼***
SOYBEANS (May)
Yesterday’s Close: May soybeans finished the day down 17 ½ cents, trading in a rang of 23 cents on the day. Funds were estimated sellers of 13,000 contracts.
Fundamentals: Better weather in the forecast for Argentina gets the gold star for being a catalyst to yesterday’s price decline; will it be too little to late? Time will tell. This morning’s export sales came in at 1,269,000 metric tons, this compares to the expected range from 800,000-1,200,000 metric tons. NOPA crush will be released this morning at 11am cst. The average analyst estimate is for 149.443 million bushels, this would be nearly 5% above the number we saw last year for the same time period.
Technicals: Yesterdays trade was technically perfect in our mind. In yesterday’s report we mentioned: “1055-1059 was first support on the way down and will now act as first resistance. We feel this represents good selling opportunity on the first test. A failure at this pocket we believe would encourage long liquidation back down towards support with 1027-1030 being the first target.”. Admittedly that target was achieved a lot quicker than we were expecting. The market has found support in the overnight and early morning session. We generally take the overnight session with a grain of salt due to the low volume. If the market cannot get follow through momentum on the open we would expect to see the sellers step back in. A breakdown below support opens the door to 1013 ¾-1016.
Bias: Neutral/Bearish
Resistance: 1049-1055***, 1070 ¼**, 1080-1082 ½****
Support: 1027-1030****, 1013 ¾-1016**, 1001-1006***
WHEAT (May)
Yesterday’s Close: May wheat futures finished the day up 3 ¼ cents, trading in a range of 7 ½ cents. Funds were estimated buyers of 3,000 contracts for the session.
Fundamentals: There have been some rains in the forecast for parts of the plains, unfortunately it is not for the areas that need it most which has helped keep a bid in the market. There is still a lot of concern over the lack of moisture in key areas, the coming weeks will be very important as the crop makes its way out of dormancy. We will continue to keep a close eye on the KC contract as it will likely be the driver. Export sales this morning came in at 162,800 metric tons, this compares with the expected range from 250,000-500,000 metric tons.
Tehcnials: The market tested support again from 478-481 ½ yesterday and managed to hold. The inability for the market to springboard off of this pocket is a bit of a caution flag, another test of it will likely trigger stops and potentially invite new sellers into the market. First resistance continues to come in from 494-495, a break and close below opens the door for a run towards the recent highs which comes in from 516 ¾-518 ½. Needless to say, the market is tightrope walking here in the middle of these technicals. We would expect to see a breakout or breakdown within the next week; much of that pending on headline news so be sure to manage risk.
Bias: Neutral
Resistance: 494-495**, 516 ¾-518 ½***, 535-538 ¾**
Support: 478-481 ½***,464 ½-467 ¾**, 451-455 ½****
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