Wheat Contracts are the Safe Haven in the Grains Market

Corn futures technical landscape has gone from bad to worse
Market sees soybean deal with China as unlikely
Spring wheat planting at 7% complete though 4% behind expectations
Grain futures market update

Grain futures market update

Corn (May)

Fundamentals: May corn futures continued to drift lower yesterday, spilling into overnight/early morning weakness today. The destruction we saw in the oil market yesterday did not help and it is raising concerns about what it could mean for the broader markets. Yesterday’s export inspections came in at 684,000 tonnes, this was below the low end of expectations. Crop Progress was released after the close, that showed corn planting 7% complete, in line with expectations and 2 notches below the 5-year average. Brazil’s second corn crop estimate was cut 1.3 million tons, to 67.9.

Technicals: The technical landscape has gone from bad to worse over the past few sessions, continuing the trend of lower lows and lower highs, taking us deeper into uncharted territory. The decline has brought the RSI down to 23.73, technically oversold but far from a good reason to buy. Our bias remains neutral.

Bias: Neutral

Previous Session Bias: Neutral

Resistance: 330-332****, 343 ¼-344 ¾**

Pivot: 313 ¾-315 ¼

Support: 298 ¾-301 ¼**

 

Soybeans (May)

Fundamentals: May soybeans continue to bleed lower as the optimism around a trade deal with China continues to evaporate. We are 25% through the year and they have lived up to roughly 16% of the agreement. Recent blame for the virus (well deserved) will likely add tension to the relationship. Export inspections yesterday morning came in at 540,000 tonnes, within the range of estimates. Yesterday’s crop progress report showed soybeans are 2% planted, in line with expectations. Brazils harvest is 92% complete, in line with their 5-year average.

Technicals: The market is working on its 7th consecutive lower close, with prices making new contract lows in the early morning trade. This has been something we have been warning about since last week’s technical breakdown. As noted in previous reports, we would not be surprised to see prices with a 7 in front. The RSI is at 26.9175. The recent low was 19, when we posted a near term bottom last month. 

Bias: Neutral/Bearish

Previous Session Bias: Neutral/Bearish

Resistance: 842-845 ¼***854-858 ¾****, 871 ¼-875**

Pivot: 820-821

Support: 791**

 

Wheat (May)

Fundamentals: Wheat is shockingly the safe haven in the grain sector, staging a strong rally yesterday and holding gains in the early morning trade. Export inspections yesterday morning came in at 349,000 tonnes, right at the low end of expectations. Yesterday’s Crop Progress report showed spring wheat planting at 7% complete, 4% behind expectations and 11% behind the 5-year average pace. 

Technicals: May wheat futures managed to hold 4-star support on Friday, rallying as much as 37 ½ cents since then to test our 4-star resistance pocket, 564-568 ½. We wouldn’t be surprised to see the market chop around within this range, over the next several sessions. If the bulls are able to chew through resistance, it could spark a bigger move higher and a retest of the January and March highs, 587-590 ¾.

Bias: Neutral

Previous Session Bias: Neutral

Resistance: 564-568 ½****, 587-590 ¾****

Pivot: 540 ½-542 ½

Support: 525-258 ¼****, 506 ¼-512 ¼***, 491 ¾****

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