EIA Ethanol Report Weighs Heavy on Corn Futures Market

April 16, 2020 09:59 AM
Corn futures trade to new contract lows while soybeans soften
Grains and oilseed futures maintain previous session's bias
Grain futures market update

Grain futures market update

Corn (May)

Fundamentals: Corn futures traded to new contract lows yesterday on the back of a technical breakdown and as expected, another poor ethanol report. That weekly EIA ethanol report showed production dropped by another 102,000 barrels per day (BPD) to 570,000 BPD, stocks are at 27.1 million barrels. From what we can see, this was the lowest close for May futures in roughly 14 years. Weekly export sales this morning came in at 906,600 metric tons, 51% below last week and 36% below the 4-week average.

Technicals: The market broke below minor support at 325, which opened the flood gates and accelerated the selling towards our more significant support pocket, 313 ¾-315 ¼. This pocket is derived using the continuous chart, going back to the August 2016 lows. A break and close below here could take us to a $2 handle. The May option expiration is next Friday. In a normal environment we’d use open interest to try and figure out where the magnet is for prices. Right now, that suggests somewhere between 330-335. Keep in mind isn’t normal environment.

Bias: Neutral

Previous Session Bias: Neutral

Resistance: 343 ¼-344 ¾**, 354-356 ¾***

Pivot: 330-332

Support: 313 ¾-315 ¼***


Soybeans (May)

Fundamentals: Soybean futures continued to soften yesterday with little new news leading to technical selling. Weekly export sales this morning came in at 244,700 metric tons, a marketing year low, down 53% from last week and 68% from the 4-week average.

Technicals: The market posted its lowest close in a month as prices broke below the low end of the recent range. There is some support from 842-845 ¼ that held by a thread yesterday. If that gives way, we will look for a “whoosh” and retest of contract lows, 821. The bears have full control until we see consecutive closes back a move our pivot pocket, 854-858 ¾.

Bias: Neutral/Bearish

Previous Session Bias: Neutral/Bearish

Resistance: 871 ¼-875**, 888 ½-889 ¾***

Pivot: 854-858 ¾

Support: 842-845 ¼***, 820-821**


Chicago Wheat (May)

Fundamentals: Weekly export sales this morning came in at 178,300 metric tons, down 31% from the previous week and 49% below the 4-week average.

Technicals: The market came within a stones throw of our next 4-star support pocket and downside target, 25-528 ¼. This pocket represents the 200-day moving average, the 50% retracement, and the breakout point from March 19. We would not be surprised to see the market begin to consolidate here. This pocket will be the new inflection point, a close below will accelerate the selling. If the bulls can defend this pocket, they’ll have hope for a relief rally and consolidation.

Bias: Neutral/Bearish

Previous Session Bias: Neutral/Bearish

Resistance: 564-568 ½****, 587-590 ¾***, 600-603 ¼**

Pivot: 540 ½-542 ½

Support: 525-258 ¼****

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