Grain Traders Book Profits on Shorts

Trump tweets don’t answer the lingering questions over this year’s grain production concerns
Upgrading Soybean futures trade from Bearish to Neutral
Upgrading Wheat futures trade from Bearish to Neutral
Grain futures market update

Grain futures market update

Corn Futures (December)

Fundamentals: Corn futures broke hard yesterday afternoon with a tweet being the culprit yet again, welcome to 2019. The previous day it was a tweet from the USDA, yesterday was a tweet from the President. If you have a longer-term perspective on the corn market you have to think to yourself, what has really changed? The answer, of course, is nothing. Those tweets don’t answer the lingering questions over this year’s production concerns. We live in a hypersensitive marketplace now and that creates an irrational/emotional trading environment.

Technicals: The market was lingering near technical support when the tweet came out, we had defined that as 404 ½-406 ¼. This pocket represents the 200-day moving average, a key Fibonacci retracement, and significant resistance from October, to the breakout point in May. We wanted to see more of pop-off support but couldn’t get it, raising some caution flags. Then the tweet came out and flushed the market lower creating peak panic, probably what the market needs after the slow grind lower over the last 3 weeks. The bulls need to achieve consecutive closes above resistance (previous support) to encourage new buying, which comes in from 418 ½-420 ½.

Bias: Neutral/Bullish

Previous Session Bias: Neutral/Bullish

Resistance: 418 ¼-420 ½***, 431 ¼-432 ¾**, 447-450***

Pivot: 404 ½-406 ¼

Support: 395-397 ¼**, 376 ½-380****

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Soybeans Futures (November)

Fundamentals: Soybeans got taken to the woodshed yesterday, following a tweet from President Trump, suggesting more tariffs are set to go into effect next month. Though this was tweeted, we wouldn’t be terribly shocked to see this threat kicked down the road. Weather will be a growing factor as we get into the month of August, there are some mounting concerns regarding dry conditions. Our bias has been Bearish for some time now, with prices approaching support we are neutralizing that bias.

Technicals: Late last week and early this week we talked about the wedge formation leading to a bigger directional move, our bias to the bearish side. That technical breakdown has led to a 40 cent drop in 3 sessions, taking prices to 4-star support, we have had that defined as 855 ½-862 ½. This is a spot for shorts to reduce and longs to dip the toes in.

Bias: Neutral - Previous Session Bias: Bearish

Resistance: 887 ½-891 ¾***, 900-904 ¼***, 922-924 ***

Support: 855 ½-862 ½****, 839 ¾-843 ¾**
 

Wheat Futures (September)

Fundamentals: The market continued to bleed lower on broad weakness in the grain sector. President Trump's tweet created “peak panic” and led to an emotional/irrational trading environment, this may be what the market needed to find a near term low. Our bias has been outright bearish for several weeks now, we are neutralizing that bias after yesterday’s session.

Technicals: Our 4-star support pocket was tested yesterday; we had defined that as 473 ¾-475. We would not be surprised to see a relief rally off here as we head into the weekend, for this reason, we are moving our bias from Bearish to Neutral.

Bias: Neutral

Previous Session Bias: Bearish

Resistance: 488 ½**, 498-502**, 510 ¼-516 ¾***

Support: 471 ¾-473 ¾***, 444½-446**, 427 ¼****

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