Soybeans: China won't disappear

CORN (July)

Yesterday’s Close (Wednesday, May 23): July corn futures finished the day up 3-¾ cents, this after trading in a range of 6 cents. Funds were estimated buyers of 13,500 contracts.

Fundamentals: Export sales this morning came in at 854,300 metric tons for 2017/2018 and 6,900 metric tons for 2018/2019. The USDA announced a sale of 140,000 metric tons to Saudi Arabia yesterday; half for the 2017/1018 marketing year and half for 2018/2019. Corn continues to be the beneficiary of a resilient wheat market as we head into a long holiday weekend. Yesterday’s weekly EIA report showed ethanol production decreased by roughly 30 thousand barrels per day to 1,028,000 barrels per day. Trade chatter continues to offer hope to the market, we will likely get more news next week when Commerce Secretary Ross visits China.

Technicals: July corn futures printed their highest price since the end of July, continuing the trend of higher highs and higher lows. The bulls have been in complete control over the past 4-5 months as funds extend their net long position, giving producers much better prices. If the bulls can achieve a conviction close above the top end of the range, we expect the market to pick up momentum. There really isn’t a lot of significant resistance until 425 ¾-426 ½. With that said, the RSI (relative strength index) is at 64 which is approaching overbought. A consolidation and a small pull back would be healthy and welcomed.

Bias: Bullish

Resistance: 415-418 ¼**, 425 ¾-426 ½**

Support: 394 ¼-397 ¼***, 390 ½**, 379 ½-383 ½****

 

SOYBEANS (July)

Yesterday’s Close: July soybean futures finished the day up 8-¾ cents, this after trading in a range of 12 cents. Funds were estimated to have been buyers of 5,500 contracts on the day.

Fundamentals: Soybeans have traded as much as 58 cents off of Friday’s lows in the early morning session. There has been renewed hope on the trade side of things, not just that China wouldn’t disappear but perhaps even start buying more agricultural products from the United States. There is not yet a lot of detail with regards to this, but we are hopeful to get more information next week when Commerce Secretary Ross visits China. This mornings export sales came in at -139,500 metric tons for 2017/2018 and 6,900 metric tons for 2018/2019. This was a less than friendly report.

Technicals: The market has blown through technical resistance levels with ease this week as funds continue to extend their net long position. Impatient bears who have been overleveraged are likely getting forced out of positions which has helped accelerate the move higher. The market has been making lower highs and lower lows, but this week’s price action has certainly changed the tide. The next resistance target for the bulls comes in from 1052 ¾-1058. A break above that takes us to retest the April highs of 1078. Previous resistance now becomes support, we see that at 1037-¾. 

Bias: Neutral

Resistance: 1052 ¾-1058***, 1074-1078****

Support: 1037 ¾**, 1013-1016**, 988 ¾-994 ¾****

 

WHEAT (July)

Yesterday’s Close: July wheat futures finished the day up 10 ¼ cents, this after trading in a range of 14-½ cents. Funds were estimated buyers of 7.500 contracts. 

Fundamentals: Crop concern continue to offer support to the market, putting us right back at the highs from the beginning of the month. Export sales this morning came in at 112,300 metric tons for 2017/2018 and 340,000 metric tons for 2018/2019. It is a long holiday weekend so perhaps we are seeing some extra premium work itself into the market. Early projections for next weeks crop progress report are for a decline due to the hotter temperatures this week. If we see ratings strengthen we could see the premium get sucked back out of the market rather quickly.

Technicals: The market has worked itself right up against our technical resistance pocket from 543 ½-545. A break and close out above this level will encourage momentum traders to jump on board and likely put the funds net long. As far as resistance goes, there wouldn’t be a whole lot of significant barriers until the July highs which is above $6. The recent move higher has brought the RSI to 64.5 which is nearing overbought. When we made highs last July the RSI was at 82, so take the “overbought” signals with a grain of salt. There are likely a lot of shorts in the market, this recent run likely has over margined traders squeezed which may be adding fuel to the fire. 

Bias: Neutral

Resistance: 543 ½-545***, 569-572***, 603 ½-609 ½****

Support: 523-524 ¼**, 502 ¾-505 ¾***

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