Energy Sector Gives Ethanol and Corn Futures Temporary Boost

Energy rally spike ethanol and corn prices
Corn Crop Progress report showed good/excellent ratings at 55%, unchanged
In early morning trade broad-based weakness in Ags overnight
Grain futures market update

Grain futures market update

Corn Futures (December)
 

Fundamentals: Corn futures sprang higher yesterday on the back of a few headlines revolving around the energy sector. The first headline was the attack on Saudi Arabia’s oil production facility, spiking oil prices which trickles down into strength in ethanol and corn. The wheels are also in motion for the Administration to increase the required biofuel blends for refineries. That news is now behind us and crude and corn are both coming off the highs in the early morning trade. Yesterday’s Crop Progress report showed good/excellent ratings at 55%, unchanged from last week and 1% above expectations.

Technicals: Yesterday’s move higher took prices within a stone's throw of resistance, which remains intact from 377-381. The market is softer this morning, the bulls want to see 363 ¾ defended through the week, a failure to do so would open the door for a retest of the bottom end of the recent range and possibly new contract lows. We will remain upbeat until the market closes below support.

Bias: Bullish

Previous Session Bias: Bullish

Resistance: 377-381**, 392 ¾***, 405-407**

Support: 363 ¾***,350-352 ¼***, 338 ¾-343**

 

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Soybeans Futures (November)

Fundamentals: November soybean futures are continuing to retreat in the early morning trade on the back of broad-based weakness in Ags overnight. U.S. and Chinese trade officials are set to meet in Washington D.C. this Thursday, we expect to see headlines and a positive spin on this. NOPA crush came in at 168.085 million bushels, 6 million bushels more than expected. Yesterday’s crop progress report showed good/excellent ratings at 54%, down 1% from last week and in line with expectations. Another case of ASF was reported, this time in South Korea, this has been a growing concern not only for the pork market but also soybean (meal) demand.

Technicals: The market is working back into support this morning, we have defined that as 885 ¾-890. We would view this as a buying opportunity on the first test. A failure to bounce off support in the next 24 hours would raise a caution flag, leaving the door open for a breakdown to last week’s breakout point.

Bias: Bullish

Previous Session Bias: Bullish

Resistance: 914 ¾-915 ½****, 924**, 936 ½**

Support: 885 ¾-890***, 850-852 ½****, 839 ¾-843 ¾**, 815 ½****

Wheat Futures (December)

Fundamentals: Chicago wheat futures managed to rally alongside the strength in the corn market but is giving up ground this morning on weakness in the broader grain sector. Money flow and price action in ags will continue to be a big driver in price action for the remainder of the week.

Technicals: The market tested and failed against the 50-day moving average for the second straight session, encouraging a light round of profit taking in the overnight/early morning trade. If the bulls can chew through this barrier, we could see an extension back towards $5.00. On the support side of things, the bulls need to defend 480 on a closing basis.

Bias: Neutral/Bullish

Previous Session Bias: Neutral/Bullish

Resistance: 493-500****, 525 ¾-531 ½****

Support: 480**, 469 ½-470**, 442-446**, 427 ¼****

 

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