A Sunday Night Low for Corn and Soybean Futures

August 31, 2020 10:55 AM
Corn Futures

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Corn futures made a slow and steady walk higher this past week, with the Sunday night open being the low, and the closing tick on Friday was the high for the week. The world will be staring at the 364-366 range as it reflects pushing the July high and hitting the 200-day moving average (purple line). If it can climb above it, holding over 366 for 2 days in a row keeps momentum running to a major resistance area at 377-380, the opening year support before new crop corn collapsed in February-March over Covid-19 collapse in ethanol demand.

Dec Corn Daily

I would expect a high Monday or Tuesday (last day of the month-first day of the month high theory), with the opportune time for a high in the Monday night session with crop ratings out Monday afternoon at 3:00 PM. If ratings drop another 5 or more you will get a spiking effect in the Monday night session or Tuesday morning that will find an initial high for this current move. 

Consolidation of the rushed high will burn time until the September report from the U.S.D.A.’s WASDE in 2 weeks.

Hedge advice: Price 35% of new corn on a spike into 363-366 with another 35% at 374-378 on Dec corn. Use the July contract using higher matching targets which are 20 cents higher if you have storage capabilities for the crop.

Here we are with Soybean futures at 952. Just like Corn futures, the low of the week was the Sunday night open with a push into Fridays high tick close. This push has been right at the doorstep of the opening highs of the year.

Technical targets suggest a matched move from the 2018 low to the January 2019 high (chart below) for November beans targets 980-990 as a major completion of a recovery form the 2018 China crush. China left, and now they are back in a big way with chatter the may take more beans in 2020 than required in the phase 1 trade deal.

Beans Weekly

Major resistance is here at 950-965 with max resistance for this run at 980-990. 

Hedge alert: Sell 35% of new crop production in the 955-965 range. Sell an additional 35% in the 980-990 range. Over $10.00 would require South American production problems at planting in October-early December.

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About the Author

Eugene Graner is the founder and President of Heartland Investor Capital Management Inc. He is a veteran commodity analyst, and broker with 28 years experience in the industry.