Grains update: Corn, wheat & soybeans

Corn (December)

Last Week’s Close (Friday, June 29): December corn futures finished Friday’s session up 5-½ cents, trading in a 10-¼ cent range, trimming losses for the week to 6-¼ cents. Friday’s Commitment of Traders report showed managed money sold 33,313 futures from June 19 to June 26, expanding their net short position to 90,764.  For the month, corn finished 12% lower helping make it the worst June for crops in over 6 years.

Fundamentals:  Friday’s USDA report had planted acres at 89.128 million, above the average analyst estimate of 88.4 million acres and the largest March to June increase since 2009.  June 1st stocks came in at 5.306 billion bushels, above the average estimate of 5.276 billion bushels.  Despite a bearish leaning report, prices held well, perhaps this is a sign that a lot of the bearish news is priced into the market.  With the report behind us, attention will turn back to weather in the corn belt.  Over the weekend we saw some areas with extreme heat and others with excessive rain, the market is unresponsive to weekend weather in the early morning trade but that could change when we get more participation from the 8:30 cst floor open.  Crop progress will be released after the close. 

Technicals:  Corn futures tested our technical resistance pocket Friday afternoon but failed to garner additional momentum to stage a technical breakout, that pocket remains intact from 376 ¼-379 ¼.  If the bulls can achieve consecutive closes above this pocket, we would expect to see additional short covering take us closer to 390.  
 

Soybeans (November)

Last Week’s Close:  November soybean futures finished Friday’s session 4 cents lower, trading in a range of 20 cents, expanding the losses for the week to 38 ½ cents.  Friday’s Commitment of Traders report showed managed money sold 25,619 futures from June 19th-June 26th, increasing their net short position to 52,656 futures.  For the month, beans finished 15% lower helping make it the worst June for crops in over 6 years.

Fundamentals:  The USDA on Friday pegged planted acres at 89.5 million, below the average estimate of 89.7 million acres but still the first time since 1983 that we have seen more bean than corn acres.  June 1sst stocks came in at 1.222 billion bushels, above the average estimate of 1.204 billion bushels.  With the report behind us, focus will turn to trade negotiations or lack there of with China.  Either way, we expect to hear something new before the week is over.  Taking a back seat to weather is weather, which doesn’t seem to be overly concerning, outside of some isolated areas.  Crop progress will be released after the close. 

Technicals: The market has been in oversold territory since June 11 when we were trading as high as 992 ¾; this is a textbook example of taking the RSI (or any technical indicator for that matter) with a grain of salt. If the market can find some legs and close back above $9.00 this week, we would expect to see a round of short covering.  A failure to gain footing will continue the “buyers strike”.  The chart is trading in uncharted territory which gives us less conviction on support targets.  The next obvious pocket comes in from....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
 

Wheat (September)

Last Week’s Close:  September wheat futures finished Friday’s session up 18 cents, trading in a range of 25 ¾ cents, leaving prices unchanged for the week.  Friday’s Commitment of Traders report showed managed money sold 7,207 futures from June 19th-June 26th, increasing their net short position to 12,068 futures.  For the month, Chicago wheat finished 8% lower helping make it the worst June for crops in over 6 years.

Fundamentals:  Friday’s USDA report showed all wheat acres at 47.821 million, above the average analyst estimate of 47.2 million acres.  June 1ststocks came in at 1.100 billion bushels, this was a hair below the average analyst estimate of 1.101. There are some concerns resurfacing with regards to global production, specifically in the Black Sea region where things may not be as good as previously thought.

Technicals:  The market closed about above technical resistance to end the week, that momentum has carried over into the early morning trade and has the market pressed up against our next pocket from 510 ½-513 ¾.  This pocket represents the 50% retracement (middle of the range) from the December lows to the May highs.  A failure to achieve a breakout above this pocket will likely encourage new selling and long liquidation. Previous resistance now becomes first support.

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.