Corn Futures (December)
Yesterday’s Close: December corn futures finished yesterday’s session down 10 cents, trading in a range of 13 cents. Funds were estimated sellers of 28,000 contracts.
Fundamentals: Improving weather forecast triggered a technical breakdown in yesterday’s session but does little to change the fact that there are a lot of question marks hanging over this year’s production numbers. Though we could see things get worse before they get better, we believe there is longer term fundamental support near the low end of the range. The bulls would like to see demand pick up; this has been a big headwind for the market. Export sales yesterday morning came in at 333,000 metric tons, a hair below the low end of expectations.
Technicals: Prices tripped stops below the low end of our support in yesterday’s session, breaking down the overall sentiment through market participants. If the bulls can defend yesterday’s lows, we could see a higher consolidation. A break and close below opens the doo for a run at 418 ¼-420 ½. This pocket represents the gap from May 28th, the July 1st and 2nd lows, and the 50% retracement (middle of the range from the contract lows to the contract highs. As mentioned in the fundamental section, we think there is longer term fundamental support that makes a test to the bottom end of the 2-month range a buying opportunity.
Resistance: 447-450**, 464-465**, 473-475****
Support: 418 ¼-420 ½****
Soybeans Futures (November)
Yesterday’s Close: November soybean futures finished yesterday’s session up ½ of a cent, trading in a range of 10 ½ cents. Funds were estimated sellers of 1,000 contracts.
Fundamentals: Soybeans were the surprise of the day, rallying off of technical support on little new news. Export sales yesterday morning came in at 326,300 metric tons, within the range of expectations. As with corn, there may be a longer-term fundamental backdrop with this year’s production numbers being a big unknown, but the lack of progress will likely prevent us from really taking off. For these reasons, we are looking for more of a rangebound trade, presenting opportunities to both the bull and bear camp.
Technicals: Our 3-star technical support pocket held in yesterday’s session; we have had that listed as 887 ½-891 ¾. This pocket represents a key retracement, the 50-day moving average, and other previously important price points including the lows from July 5th, 8th, and 9th. On the resistance side of things, the bulls want to reclaim ground above 915 ¼-918 ½. Consecutive closes above here could extend the relief rally back towards the top end of the range, closer to 940.
Resistance: 915 ¼-918 ½***, 934 ¼-938 ¾****, 948-950**
Support: 887 ½-891 ¾***, 875 ¼**, 855 ½-862 ½****
Wheat Futures (September)
Yesterday’s Close: September wheat futures finished yesterday’s session down 11 ½ cents, trading in a range of 12 ¼ cents. Funds were estimated sellers of 7,000 contracts.
Fundamentals: Wheat futures rolled over hard on what has been a developing bearish technical pattern. Bearish technicals coupled with ample global supply and dismal demand have been a big hurdle for the bull camp over the past month. Weekly export sales came in at 347,300 metric tons, within the range of expectations. Our bias remains outright Bearish.
Technicals: The bearish Head & Shoulders technical pattern continues to play out, we have been discussing this for some time now. There is minor support for 486 ¼-491 ¾, this could offer short term relief, but a failure to stabilize above $5.00 keeps the bears in total control. If first support gives way, we would not be surprised to see a whoosh lower, taking prices into the mid-470’s.
Resistance: 514 ¼**, 531 ½-536 ¼**, 562 ¾**
Support: 486 ¼-491 ¾**, 473 ¾-475****