Good Weather Keeps Planting on Pace

May 5, 2020 09:37 AM
USDA report had a bearish tilt for corn
Mounting trade tensions hit Soybean futures
Bear camp still controls Wheat futures
Grain futures market update

Grain futures market update


Corn Futures (July)

Fundamentals: Corn futures tried to breakdown yesterday, following a weekend of favorable weather that helped producers stay ahead on planting. Yesterday’s USDA’s Crop Progress report showed U.S. corn is 51% planted, above the estimates and well above the 5-year average, 39%. The fact that the market is higher in the early morning session is a good sign for producers and speculative longs, but they’ll need to see it hold through the floor open. Yesterday’s export inspections came in at 1,217,000 metric tons, above the top end of estimates.

Technicals: The market held relatively well into yesterday’s close and the overnight price action is encouraging too. The planting progress report had a bearish tilt, but the market was not able to break lower. This could be a fundamental rejection, a near term friendly sign for the market, but we will want to see how the floor opens for confirmation of the overnight price action. The chart is still bearish, but consecutive closes above 320-325 would be the first step in neutralizing the chart, putting an end to the trend of lower highs. We’ve also marked higher lows so far this week. 

Bias: Neutral/Bearish

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: Soybean futures took a hit yesterday as tensions mount between the U.S. and China, raising concerns over the “trade deal” and the potential for more tariffs and less trade to come. Weather over the weekend was good, helping producers in the U.S. to get the crop in the ground at a great pace. Yesterday’s USDA report showed that the U.S. soybean crop is 23% planted, ahead of expectations and well above the 5-year average pace, 11%. 

Technicals: The market retreated and held our pivot pocket again, defined as 829-834. We wouldn’t be surprised to see the market settle into a range in the near term between our pivot pocket and 4-star resistance, 857-861 ¼.

Bias: Neutral

Previous Session Bias: Neutral/Bearish

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

Pivot: 829-834

Support: 818-821***, 808 ¼***, 791**


Chicago Wheat (July)

Fundamentals: Wheat futures started the week under pressure but manage to rally into the afternoon session. Export inspections came in at 536,000 metric tons, within the range of expectations. Spring wheat planting is said to be 29% complete, within the range of estimates, but behind the 5-year average 43%. Winter wheat Good/Excellent conditions are at 55%, 2% above expectations.

Technicals: Wheat futures tested and held our 3-star support pocket again, that remains intact on a closing basis. We have seen decent recoveries off the lows recently, indicating that there are bargain buyers as we approach the $5.00 handle. With that said, the bear camp is still in control until we see consecutive closes above 525-529.

Bias: Neutral/Bearish

Previous Session Bias: Neutral/Bearish

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

Pivot: 525-529

Support: 506 ¼-512 ¼***, 491 ¾-494 ¼****

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