A Soft Start for Corn Futures

May 4, 2020 09:05 AM
The USDA's Crop Progress report come out today
U.S. soybeans 17% planted
For Wheat futures, the lack of bullish news continues to be just as bad as bearish news
Grain futures market update

Grain futures market update

Corn (July)

Fundamentals: Corn futures are softer to start the week on the back of good weekend weather, one of the main reasons we recommended selling last week’s midweek rally ahead of the weekend. The USDA's Crop Progress report will be out after the close, expectations is for U.S. corn planting to be 45-48% complete, well ahead of the 5-year average, 39%. On top of that, we have trade tensions escalating between China and the U.S., which could lead to more tariffs and a complete breakdown of the (already suspect) agreement. Friday’s Commitment of Traders (COT) report showed funds are short 160,975 contracts.

Technicals: Last week’s trade offered plenty of opportunity for short term traders, both bulls and bears. Looking at a longer-time horizon, the bears are still in full control. Consecutive closes above 320-325 would be the first step in neutralizing the chart, putting an end to the trend of lower highs. 

Bias: Bearish/Neutral

Previous Session Bias: Bearish/Neutral

Resistance: 320-325***, 330-333****, 343 ¼-344 ¾**

Pivot: 316-317 ¾

Support: 308 ¼-310*** 298 ¾-301 ¼**


Soybeans (July)

Fundamentals: Soybeans are under pressure to start the week as trade tensions with China continue to escalate with the threat of more tariffs coming down the pike. Good weekend weather doesn’t help the bull camp much either. This afternoons Crop Progress report is expected show U.S. planting progress roughly 17% complete, 5% ahead of the 5-year average. Friday’s COT report showed funds are net long 4,392 contracts. This is a bit of a caution flag, funds have powder to add short at these low prices, with a lot of fundamental headwinds in the near/intermediate term future. 

Technicals: The market was technically sound last week, prices defended our pivot pocket and rallied to our 4-star resistance pocket, ultimately failing. The failure at resistance keeps that pocket intact, 857-861 ¼. The bear camp has the advantage until we see consecutive closes above here. Last week’s pivot pocket remains intact, 829-834. A break and close below could take us to retest the contract lows, 818 ½. 

Bias: Neutral/Bearish

Previous Session Bias: Neutral

Resistance: 857-861 ¼****, 871 ¼-875**

Pivot: 829-834

Support: 818-821***, 808 ¼***, 791


Chicago Wheat (July)

Fundamentals: Chicago wheat futures gaped lower Sunday night as the lack of bullish news continues to be just as bad as bearish news, something we have been talking about for the last few weeks. The most recent COT report showed funds holding a net long position of 15,975 contracts.

Technicals: The market was technically sound last week, holding our 3-star support pocket perfectly and then finding relief to our pivot pocket. The trend of lower highs and lower lows led to that pivot pocket getting sold into ahead of the weekend, helping add to pressure in the early morning trade. The market is back at the low end of our 3-star support pocket, 506¼. This was the breakout point from March 19. A break and close below could take us back not the low-mid 490s in a relatively short amount of time. 

Bias: Neutral/Bearish

Previous Session Bias: Neutral/Bearish

Resistance: 538-540 ½**, 552-554 ¾***, 562-565½****

Pivot: 525-529


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