Corn Futures (December)
Fundamentals: Corn futures broke to new contract lows yesterday in a fairly quiet/slow trading session. Yesterday’s crop progress report showed good/excellent ratings at 58%, up 1 % from the previous week and in line with expectations. Export inspections came in at 355,111 metric tons, below the low end of estimates. The shift in forecasts to warmer weather alleviated some concern over an early frost, a major headwind to start the week. Overall money flow remains week which keeps the bears in control. Our bias remains Neutral/Bullish, AKA cautiously optimistic. The fundamental backdrop regarding production continues to lure people in, but the technicals are undoubtedly bearish.
Technicals: The market took out the low end of the recent range and made new contract lows at 360 ½. The market has firmed overnight but is nothing to write home about. The bulls need to see consecutive closes back above 363 ¾ to encourage a retest to the top end of the recent range, 377-381. As far as the next support goes, there is not a lot until 338 ¾-343.
Previous Session Bias: Neutral/Bullish
Resistance: 377-381**, 392 ¾***, 405-407**
Support: 360*, 338 ¾-343**
Soybeans Futures (November)
Fundamentals: Soybeans bucked the trend yesterday, coming off the lows and finishing the session near unchanged. Concerns are continuing to mount for the quality/production of the late-planted crop, adding some premium to prices. Though we share similar concerns, we believe the lack of a trade deal will keep rallies somewhat limited (see technical section below). Yesterday’s crop progress report showed good/excellent ratings at 55%, unchanged from the previous week and in-line with expectations. Weekly export inspections came in at 1,281,426 metric tons, above the top end of estimates.
Technicals: The market managed to defend support yesterday, potentially marking higher lows. If we see prices reclaim ground above 880-882 that will market higher highs, a potentially trend changing event. If the bulls can achieve this, a run back towards $9.00 in a short amount of time is not out of the question. From that point it will likely be a battle, assuming no new news on the trade front.
Previous Session Bias: Neutral
Resistance: 880-882**, 891 ½-896 ¾***, 921-924***
Support: 852 ½-856 ½****, 839 ¾-843 ¾**, 815 ½****
Wheat Futures (December)
Fundamentals: December wheat futures broke to their lowest level since May 13th, the day we made contract lows. Export inspections came in at 526,049 metric ton, within the range of expectations. Yesterday’s crop progress report showed spring wheat 55% harvested, within the wide range of estimates. Good/excellent ratings came in at 67%, below the low end of expectations and 2% below last week’s. The U.S. dollar hit another all time high (trade weighted) which has continued to be a major headwind for multiple commodities.
Techncials: We have been looking for the ZW/KC wheat spread to come in and yesterday morning we got a little excited, only to see it reverse after the floor open. With that said, it doesn’t change how we feel about the spread. We continue to believe Chicago wheat has more downside than the KC contract at the current levels.
Previous Session Bias: Neutral/Bearish
Resistance: 483 ½**, 493-500****, 525 ¾-531 ½****
Support: 442-446**, 427 ¼****