'Line In Sand' For Soybean Futures Bulls Is 9.35

January 14, 2020 08:59 AM
Grain futures market update

Grain futures market update

Corn Futures (March)

Fundamentals: Weekly export inspections came in at 460,307 metric tons, towards the low end of estimates. The USDA did report a sale of 137,000 metric tons to South Korea. With the USDA report behind us, much of our attention will be on money flow and technicals. Funds are still short roughly 80,000 contracts, strong technical closes could squeeze shots and cause a bigger short-covering rally.

Technicals: Corn futures traded higher yesterday on technical short-covering, spilling over into moderate overnight/early morning strength. 390 ½-392 has been and remains our significant resistance pocket, representing the top end of the recent range, along with other previously important price points. A conviction close above here would likely trigger a bigger wave of technical short covering. Our bias going into this week’s trade is Bullish/Neutral, closes above technical resistance would change that to outright Bullish.

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Soybeans (March)

Fundamentals: Soybean futures were mixed yesterday as much of the optimism around Phase-1 deal seems to be priced in (see the 75-cent rally in December for reference). Export inspections yesterday came in at 1,136,304 metric tons, this was a notch above the top end of estimates. Weather in South America continues to be favorable for crop development. If you’re looking to hedge, these are prices to consider dipping your toes in.

Technicals: The market has been treading near our support pocket for the last seven sessions, we’ve defined that as 933 ¾-937 ¼. If you’re bullish, you want to see a springboard reaction off support, the fact that we are lingering down here should be concerning. A break and close below support opens the door for a potential drop to 920-922 ¾. This pocket represents a key retracement, the 200-day moving average, and several previously important price points. We are giving our bias a bearish tilt until we see consecutive closes above our pivot pocket from 950 ½-955.

Bias: Bearish/Neutral

Previous Session Bias: Neutral

Resistance: 968 ½-970****

Pivot: 950 ½-955

Support: 933 ¾-937 ¼***, 920-922 ¾****


Chicago Wheat (March)

Fundamentals: Chicago wheat futures were under moderate pressure yesterday but managed to turn the tide in the overnight/early morning trade. Weekly export inspections came in at 473,960 metric tons, towards the top end of estimates. At these prices we see minimal value to the buy-side, this has kept our bias at neutral (a more bullish tilt on KC wheat). With prices inching towards technical resistance we will begin looking to become more bearish on a confirmed failure.

Technicals: The trend of higher lows and higher highs remains intact and a retest of the double top highs from June remains probable. That resistance pocket comes in from 572 ¼-573 ½. Perhaps the market searches for stops above this pocket, but we would look at this as an opportunity to sell on the first test. The RSI is at 67.43, approaching overbought conditions. On the support side of things, 554 ½-557 ¼ has been our pivot pocket. This was tested and held following Friday’s report, keeping it intact to start this week’s trade.

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