Today’s commodity news – BrokersEDGE – DAW Trading 6-27-18

CORN (December)

Yesterday’s Close: December corn futures finished yesterday’s session up 2 cents, trading in a range of 7 cents. Funds were estimated buyers of 5,000 contracts on the day.

Fundamentals: News early this morning that the White House has decided against taking the harshest measures on China investments has given stocks and commodities some oomph, the bull camp will want to see volume confirm price on the floor open. Early estimates are for Friday’s planted acres report come in near 88.56 million, up from 88.03 in the March report. Quarterly stocks estimates are coming in near 5.268 million bushels. We would not be surprised to see some position squaring ahead of the report. Once we get through the report, attention will turn back to the July 6th trade deadline (we could hear news before then).

Technicals: The market managed to hold technical support yesterday, a pocket that we have had listed as 369-371. Now prices are testing our first resistance pocket from 376 ¼-379 ¼. If the bulls can achieve consecutive closes above this pocket, we expect to see additional short covering. The next line in the sand is 387 ¾, the more significant pocket comes in from 397 ½-399 ¼. The RSI (relative strength index) has crawled out of “oversold” territory, reading at 34.37 this morning.

Bias: Neutral/Bullish

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

Support: 369-371***, 359-360 ½****, 345 ½-350****


SOYBEANS (November)

Yesterday’s Close: November soybean futures finished yesterday’s session down 7 ¾ cents, trading in a range of 18 ¾ cents. Funds were estimated sellers of 9,000 contracts.

Fundamentals: Soybeans are finding their footing this morning on the back of news that the White House has decided against taking the harshest measures on China investments, giving stocks and commodities some positive momentum heading into the floor open. Does that mean the “harshest” measures were priced in? On Friday the USDA will release their quarterly stocks and planted acres report, released at 11am cst. Early estimates for planted acres is near 89.69 million acres, up from the 88.98 in the March report. Quarterly stocks estimates are coming in near 1.225 million bushels.

Technicals: The market has been sliding lower the past two sessions as it appears there are not any willing and able buyers ready to buy ahead of Friday’s report. The RSI (relative strength index) is still lingering in oversold territory with a reading of 25.35 this morning. The bulls want to reclaim 897 ¾-900 ¾ on a closing basis, a failure to do so could take us to new lows. On the resistance side of things, there is not a lot until 921 ¾-923 ½. A close above this pocket will likely encourage additional short covering. The RSI (relative strength index) is at 25.42, still in “oversold” territory. A historical side note (for what it’s worth): The market bottomed last year on June 23rd and rallied $1.05 ¼ in the following 12 sessions.

Bias: Neutral/Bullish

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

Support: 891 ¾-892 ½**, 882 ½**, 857-864****


WHEAT (September)

Yesterday’s Close: September wheat futures finished yesterday’s session down 7 cents, trading in a range of 15 ¾ cents. Funds were estimated sellers of 5,500 contracts on the day.

Fundamentals: Wheat futures are stabilizing in the early morning trade as some positive news comes out of Washington to support markets (for now). The news this morning, that the White House has decided against the harshest measures against China. Early estimates for Friday’s quarterly stocks and planted acres report are being digested by the market. Estimates for all wheat acres are near 47.12 million acres, down from 47.34 in the March report. Quarterly stocks are expected to come in near 1.091 million bushels.

Technicals: Wheat futures have found footing this morning after testing and holding the bottom end of the range yesterday, that comes in from 475 ¾-480. Previous support now becomes first resistance, we see that coming in from 496 ¼-500. This pocket represents a key retracement on the year, the 200-day moving average, and the psychologically significant $5.00 handle. A failure to breakout keeps the bears in total control. The next line in the sand for support comes in at 487.

Bias: Neutral/Bearish

Resistance: 496 ¼-500***, 507 ½**, 523***

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


E-mini S&P (September)

Yesterday’s close: Settled at 2728.50, down 6.25

Fundamentals: After pausing though yesterday’s session, volatility is working its way back into global markets. The S&P found a low of 2705.50 at 3:30 am CT before bouncing 0.5%. European benchmarks followed a similar pattern; the DAX lost nearly 1% before regaining unchanged on the session. However, the same does not go for China; the Hang Seng is down almost 2% today and the Shanghai Composite has shed another 1% after officially closing in bear market territory yesterday. The Dollar/Yuan has reached the highest level since mid-December as China continues a devaluation process with the U.S and China trade relations in mind. Rattling investors around the world is the same trade war rhetoric and when it hits the headlines, equity markets react. It was again reported that Chinese President Xi is readying for a “full-scale trade war”. This time, adding what was due to become inevitable; China would limit or cut purchases of U.S Treasuries. This is a factor that the White House must have expected, but we do not believe global markets have priced in. Considering the massive supply of Treasuries that have been hitting the market in auctions this year, there must be buyers to support prices. If prices are not supported, they of course drop, which means yields rise and debt costs more to service. This morning, the U.S 10-year is at 2.85%, a far cry from the 3.128% high of the year and at the lowest level since May 31st, when the Italian crisis was working through markets. This is not a concern here but could become one at a steady pace. Our belief has been that Treasury yields, once the 10-year achieved 3%, would not go higher for longer. However, this could bring unforeseen circumstances; if the U.S loses China as a buyer, either investors come out of the equity market to depress yields or price action will force them to.

Durable Goods data is due this morning at 7:30 am CT. Last week, Philly Fed Manufacturing and Manufacturing PMI missed with orders falling sharply. Today’s read is a May number, but it will remain important to closely watch for effects of the trade war. Also, Pending Home Sales is due at 9:00 am CT. Fed Governor Quarles speaks at 10:00 am CT and Boston Fed President Rosengren is at 11:15 am CT. There is a 5-year auction at noon CT.

Technicals: Yesterday, we said resistance at 2735.75-2737 is almost as strong as a three-star and it proved such keeping prices action in check from further gains. The day settled right at the 2728.50 minor level and then lost nearly 1% to an overnight low of 2705.50 before stabilizing into this morning. Given Monday’s low and yesterday’s high, we now have a defined range and a close outside of that should lead directionally. Still, we cannot ignore key support at 2695.75 or major three-star resistance at 2745.50-2748.50. The 100-day moving average aligns with the overnight low and a move below here is now needed on the session in order for the bears to remain in the immediate-term driver’s seat, anything less could easily lead to short covering and fresh buying into the close given another hold in this broad psychological 2700/100-dma area. However, a move below 2695.75 opens the door to accelerated selling down to our rare major four-star level at 2670.25-2671.50.

Bias: Neutral/Bearish

Resistance: 2728.50*, 2735.75-2737**, 2745.50-2748.25***, 2759.50**, 2768.50-2773**

Pivot: 2720.25-2724.75***

Support: 2705.50-2707.75**, 2700.50**, 2695.75**, 2679.25**, 2670.25-2671.50****, 2660***



Crude Oil (August)

Yesterday’s close: Settled at 70.53, up 2.45

Fundamentals: Crude Oil surged 3.6% yesterday after the White House issued a statement hardening their stance on Iran; countries must import zero Crude from Iran by November 4th or face U.S sanctions. While the timing of this announcement clearly surprised the market, it is just another factor in our long-term bullish stance on Crude Oil. Shortly before this announcement Saudi Arabia clearly planned to cushion the blow by announcing they will ramp up production to a record 10.8 mbpd in July. While Crude knee jerked slightly lower on that news, the reaction was very muted considering such and signaled there was likely more to follow. Inventory data comes into the picture today and yesterday’s API read set a very high bar with Crude at -9.228 mb. They had Gasoline at +1.152 mb and Distillates at +1.785. The headline Crude number helped extend the tape overnight. Expectations for today’s EIA data are -2.572 mb of Crude, +1.313 mb Gasoline and +0.774 mb Distillates. Remember though, despite these expectations, after a headline of -9.228 from API last night we must see a draw in the ballpark of 5 mb or more in order to get near the bar that was set.

Technicals: Our Bias has been Bullish Crude and remain such, however, traders who have not participated in this rally should not just chase Crude at these levels or before this inventory report. Support now comes in at yesterday’s resistance which is also where it settled; considering what inventories show 70.40-70.58 is a level in which traders can step long. Still, considering the size of recent gains, it would be smart to protect such with put options. A close below here would be disappointing though and should signal a consolidation over the next 24-48 trading hours. However, a more bearish leaning inventory report would open the door to the swing highs leading up to yesterday morning which now come in as support at 69.38-69.44.

Bias: Bullish/Neutral

Resistance: 72.35-72.70****

Support: 70.40-70.58**, 69.38-69.44**, 68.37-68.58**, 67.03-67.09***,




Gold (August)

Yesterday’s close: Settled at 1259.9, down 9.0

Fundamentals: Many have asked, why is Gold not finding support or rallying when the Dollar Index is lower? It is important to remember that the Dollar Index is 57.6% the Euro. This is not a true gauge of what the Dollar is doing across broader currency markets. In fact, the Dollar has gained 2.6% against the Chinese Yuan over the last three weeks as China devalues amidst the trade war battle. The Dollar/Yuan is now at the highest level since mid-December and guess where Gold is, the lowest level since mid-December. Today, we look to a key read on Durable Goods at 7:30 am CT and Pending Home Sales at 9:00 am CT. Fed Governor Quarles speaks at 10:00 am CT and Boston Fed President Rosengren is at 11:15 am CT. There is a 5-year auction at noon CT.

Technicals: While Gold remains under pressure, we continue to eye our rare major four-star support level. We have not seen so much technical support aligning in one area since Gold was nearing $1000 in late 2015. Furthermore, given the drop yesterday, we are excited to see the new CoT report due Friday which has a chance of showing the first net-short Gold position since that 2015 low. Be patient, we believe a low is coming soon.

Bias: Neutral/Bullish

Resistance: 1277.5-1281.7**, 1291.3-1293.7***, 1299.6**, 1305.5-1313***, 1321**, 1332.4***

Pivot: 1259.9-1262.4

Support: 1238.3-1250****


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