Corn Futures (May)
Fundamentals: Yesterday’s USDA report had prospective acres at an astonishing 96.99 million acres, well above the average estimate of 94 million. Quarterly stocks came in at 7.953 billion bushels, towards the low end of estimates. The USDA did announce a sale of 113,000 metric tons to Japan. There has been a lot of talk about corn holding up relatively well and it has. Some of that on the back of spillover strength from soybeans and wheat, each of which have seen 80-90 cent rallies over the last few weeks. If those markets turn south, it could put corn on its heels more.
Technicals: In yesterday’s report we talked about the sentiment around corn being so overwhelmingly bearish, that it’s bullish (if everyone is thinking/saying the same thing, maybe it’s time to do the opposite). We also talked about what would happen when we got passed this report; there will be little new bearish news to throw at the market. Does that mean the bottom is in? Heavens no. But we would be cautious of selling aggressively here. Prior to the report we removed the bearish tilt in our bias and went to outright Neutral. Though we think the upside is limited, we would not be surprised to see a tradeable short-covering rally in the very near term. If you have hedges on, you’ll probably want to stay hooked. We would use a relief rally as an opportunity to sell, for clients who want to be short and/or need to hedge more. The first resistance comes in from 354-356 ¾.
Soybeans Futures (May)
Fundamentals: Yesterday’s USDA report showed quarterly stocks at 2.253 billion bushels, right in line with the average analyst estimate. Prospective plantings came in at 83.510 million acres, within the range of expectations but below the average estimate, 84.865.
Technicals: The market had been constructive and had been forming a Bull Flag, unfortunately yesterday’s report wasn’t bullish enough to see that formation play out. The market is softer this morning, alongside the outside markets. Prices are at the bottom end of the recent range (our pivot pocket, 871 ¼-875), a break below here could take us back to 854-858 ¾. This is a pocket we would consider buying on the first test. It represents a key retracement and other previously important price points.
Previous Session Bias: Neutral/Bullish
Resistance: 888 ½-889 ¾***, 899 ½-902 ¼***, 915-920****
Pivot: 871 ¼-875
Support: 854-858 ¾***, 842-845 ¼***, 820-821**
Chicago Wheat Futures (May)
Fundamentals: Yesterday’s USDA report showed All Wheat Acres at 44.655 million, within the range of estimates. Quarterly stocks came in at 1.412 billion bushels, within the range of expectations. There are some thoughts that consumer demand for products that use wheat may have peaked, as they stockpiled pantries amidst the panic of stay at home orders across the world.
Technicals: The chart is beginning to soften up with yesterday’s close below support. Previous support now becomes resistance, 564-568 ½. If the bulls fail to reclaim this pocket, we could see the market retreat back into the mid 540’s. This area represents the 50 and 100-day moving average, a key retracement, and the breakout point from March 23rd.