Grains update: Corn, wheat & soybeans

Corn (December)

Yesterday’s close (Thursday, June 28): December corn futures finished yesterday’s session down 7 cents, trading in a range of 10 cents. Funds were estimated sellers of 17,500 contracts.

Fundamentals: Export inspections yesterday morning came in at 1,511,746 metric tons, a strong number that offered little support to the market.  Attention this week will be on weather and Friday’s USDA report which will give us an updated look at quarterly stocks and planted acres. Weather so far this year has been ideal for many major areas, keeping the good/excellent rating at a lofty 77%. There are some concerns that hot and dry weather in the intermediate term, but the market is shrugging that off for now. 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 had a healthy consolidation to end last week’s trade which led us to believe we could see a short covering rally extend the market higher, but yesterday’s lackluster trade has raised some caution flags for us. The market is now testing first support from 369-371, a pocket that the bulls desperately need to defend on a closing basis. A break and close below could encourage another wave of selling.  On the resistance side of things, the market failed to breakout above our resistance pocket.
 

Soybeans (November)

Yesterday’s Close: November soybean futures finished yesterday’s session down 23 cents, trading in a range of 28 cents.  Funds were estimated sellers of 13,500 contracts.

Fundamentals:  Export inspections yesterday morning came in at 514,214 metric tons, within the range of expectations.  Crop progress released yesterday afternoon showed good/excellent conditions for soybeans unchanged at 73%.  Trade concerns continue to weigh on the market, the trade deadline is set for July 6th, we should get more clarity by that date.  On Friday the USDA will release their quarterly stocks and planted acres report, released at 11 a.m. Central.  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 finished last week with a silver-lining, but the market was unable to feed off that to start the week.  Yesterday’s weakness was more than we would have expected, and the close below $9 was less than encouraging.  The market has gained back some ground in the early morning trade, but we will need to see volume confirm price on the floor open.  The bulls want to reclaim 898 ½-900 ¾ on a closing basis, a failure to do so could take us to new lows.  
 

Wheat (September)

Yesterday’s Close:  September wheat futures finished yesterday’s session down 11 cents, trading in a range of 16 ¾ cents.  Funds were estimated sellers of 8,000 contracts.

Fundamentals: Export inspections yesterday morning came in at 352,836 metric tons, within the range of expectations.  Crop progress showed that 77% of the spring wheat crop is good/excellent, down 1% from last week.  Winter wheat is now 41% harvested, 1% above what analysts were expecting.  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 : The market has been struggling to regain ground on the chart over the last week as spill over pressure from corn and beans continue to weigh on wheat.  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.  

About the Author

Oliver Sloup is Vice President of Blue Line Futures, a leading futures and commodities brokerage firm located at the Chicago Board of Trade. He has been a guest on CNBC and Bloomberg and has over a decade of trading experience.