Keep your eye on beans

December 13, 2017 10:45 AM
Daily Grain Report

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SOYBEANS (January)

Yesterdays Close: January soybean futures closed 5 ½ cents lower yesterday, trading in a range of 11 ¼ cents on the session.  Funds were estimated sellers of 8,000 contracts on the day.

Fundamentals: Yesterdays USDA report showed U.S. ending stocks at 445,000,000 bushels, this was within the expected range from 425,000,000-486,000,000 metric tons so no major surprises there. World ending stocks came in at 98.32 million metric tons, this was towards the top end of the expected range from 95.52-99.00 million metric tons. With this report behind us, attention will again turn to weather and crop developments in Argentina and Brazil.  If we do see drier weather come into the forecasts we could see some premium come into the market and at least put a near-term floor in.  Export sales will be out tomorrow morning, those will also need to be monitored going forward.  The bulls want to see continued beats on that front; numbers within expectations may not be enough to spark the interest of buyers.

Technicals: Yesterday's close marked the fifth consecutive close lower, taking off as much as 39 ¼ cents off of prices from high to low.  The 200-day moving average is holding as support in the overnight and early morning session, that comes in at 976 ½ a break and close below opens the door towards the bottom end of the range from 967-968 ¼. On the resistance side of things, 984 ¾ is the first target, this represents the 50% retracement from the June lows to the July highs (also the years' range).  If the market can achieve consecutive closes above this level, we could see funds step back in and extend their net long position to press prices back towards the $10 handle.

Bias: Bullish

Resistance: 988 ¾**, 999-1004**, 1015**, 1021 ½****, 1036-1041**
Pivot: 984 ¾
Support: 976-977 ¼**, 967-968 ¼****, 962 ½-963 ¼**

CORN (March)

Yesterdays Close:  March corn futures closed 1 ¾ cents lower, trading in a range of 5 ½ cents on the session. Funds were estimated sellers of 5,500 contracts on the day.

Fundamentals: Yesterdays USDA lived up to its expectations of being a non-event. USDA showed the U.S. ending stocks at 2.437 billion bushels, this was within the estimate range from 2.394-2.517 billion bushels.  World ending stocks came in at 204,080,000 metric tons which were towards the top end of the expected range from 195,700,000-205,000,000 metric tons.  The USDA also reported a sale of 152,000 metric tons of corn to Mexico.  With this report behind us, attention will again shift back towards weather and crop development in South America.  Weekly export data will also need to be monitored closely; export sales are due out tomorrow morning. 

Technicals: Corn staged an outside day yesterday, trading above the top end and below the low end of the previous days' range. The close towards the bottom end of that should have the bulls concerned of another le lower.  We do know that funds had covered roughly 70,000 of the shorts from their record short position which means they do have more ammunition to the sell side.  If the market cannot achieve consecutive closes back above the 350 level this week, we would not be surprised to see a run towards 335 in the near future.  The relative strength index (RSI) is reading 39.62 which is relatively neutral for a bear market in our opinion. 

Bias: Neutral

Resistance: 358-360 ½****, 369 ¼-370 ½***, 375****
Support: 348-350**, 334-335 ½***, 323-325 ¼**

WHEAT (March)
Yesterdays close: March wheat futures closed 2 ½ cents lower, trading in a range of 8 ¼ cents lower on the session.  Funds were estimated to have been sellers of 3,000 contracts on the day

Fundamentals: Yesterdays USDA report showed that U.S. ending stocks were 960,000,000; this was the top end of the expected range from 925,000,000-960,000,000 bushels.  As we have been mentioning, the market has been kept in check by ample supplies and weak demand.  World ending stocks came in at 268,420,000 metric tons, this was also at the top end of the expected range from 264,000,000-270,000,000 metric tons.  Export sales will be out tomorrow, bulls are hoping that low prices will cure low prices and demand will begin to pick up. 

Technicals: Yesterdays lower close was the seventh consecutive.  We have been hammering on playing the short bias and only buying to cover shorts; as tempting as it is to flip we are remaining patient for better prices to resell.  There is nothing worse than having a bearish bias and being caught long when the market continues to fall.  We would not be surprised to see the market continue towards the $3 handle in the intermediate term.  On the resistance side of things, 424 ¼ is the first line in the sand but 430 ½-433 ½ is the more significant pocket the bulls want to see a close above. 

Bias: Bearish

Resistance: 424 ¼**, 430 ½-433 ½**, 443-445¾ ****
Support: 399-402 ¾****, 392-394**, 381-383 ¾***

About the Author

Oliver Sloup is Vice President of Blue Line Futures, a leading futures and commodities brokerage firm. Oliver has over a decade of trading experience and has been a guest on CNBC, Bloomberg and RFD TV among others.  Prior to Blue Line Futures, Oliver worked as the Director of Managed Futures at iiTRADER.