Short Squeeze?
Corn
Technicals (May)
May corn futures were able to defend our pivot pocket in yesterday’s trade and are now flipping the script and knocking on the door of the 20-day moving average, which we haven’t been able to close out above once this year. If the overnight strength is confirmed through the floor open and holds through the morning, the next upside objective could be met in short order, which we set as 440-441.
Bias: Bullish
Resistance: 440-441***, 447 1/2-450****
Pivot: 429 1/2-433 1/4
Support: 421-422***, 415-416***, 398-402**
Fundamental Notes
Brazilian corn production estimates will be in focus for Friday’s WASDE report. The average estimate comes in at 121.95 MMT, that is 2.05 less than the USDA’s February report and well below last year’s 137.
Weekly export sales will be out at 7:30 am CT.
Seasonal Tendencies
We put together a more in-depth seasonal analysis article yesterday, zooming in on historical price action leading up to the quarterly stocks and prospective plantings report. Check it out here:
Weekly Seasonal Analysis Update – Blue Line Ag Hedge
Fund Positioning
We took a deeper dive into current Fund positioning and price action and how it compares with 2019. Check it out here:
Are Funds Overextended? – Blue Line Ag Hedge
Soybeans
Technicals (May)
May soybean futures are once again knocking at the door of trendline resistance, with the 20-day moving average (purple line in chart below) coming in just above that. If the Bulls can clear this hurdle, we would expect to see additional momentum via short covering propel prices back higher, with an eventual upside target of 1198-1205 1/2 being in the cards. On the flipside, the Bears will remain in control if the overnight strength fails to hold through the floor open, where we get more participation.
Bias: Neutral/Bullish
Resistance: 1163-1168****, 1184**, 1198-1205 1/2***
Support: 1125-1130**
Fundamental Notes
The USDA has been slow to make any significant adjustments for Brazilian soybean production (relative to many other analysts), part of the reason may be the fact that the USDA had initially underestimated the Brazilian crop over the last 4-years. However, this year seems to have come with another set of weather issues. With harvest over 50% complete will they have the data to make the move? The average analyst estimate for Brazilian soybean production comes in at 152.8 MMT, that would be down from the 156 the USDA estimated in February.
Seasonal Tendencies
Seasonal tendencies have been out the window to start the year, so I’m not sure how much weight one puts into them at this juncture, but seasonally we tend to see some consolidation and strength from the middle of March to the middle of April.
*Past performance is not necessarily indicative of futures results.
MRCI shows back tested results for a bullish seasonal that starts on March 17th and goes through April 21st. They show this as bullish for 13 of the last 15 years with the average rally being about 56 cents and the average loss being about 37 cents. See the table below.
*Past performance is not necessarily indicative of futures results.
Commitment of Traders Snapshot
(updated on Mondays)
Friday’s Commitment of Traders report showed yet another week of net selling by Funds, extending their net short position to 160,653 futures and options contracts. That’s an increase of 23,975 contracts, 20,576 of which were new short positions.
Wheat
Technicals (May)
Wheat rolled out of bed in yesterday’s trade, despite the US Dollar closing below two major moving averages and the lowest price in over a month. Yesterday’s decline did do technical damage, which leaves more work to be done for the Bulls to get the ball back in their court. 550-555 is the pocket they want to see consecutive closes back above.
Bias: Neutral
Resistance: 573-578***, 595 3/4-600***, 608 1/2-611**
Pivot: 550-555
Support: 525**
Fundamental Notes
- Rumors of export cancellations swept through the market but have yet to be confirmed.
- Weekly export sales will be out at 7:30 am CT.
Seasonal Tendencies
Below is a look at historical seasonal averages for May Chicago wheat futures VS this year’s price (black line), updated each Monday. As you can see, seasonal tendencies start to soften up in the back half of March.
*Past performance is not necessarily indicative of futures results.
Commitment of Traders Snapshot
(updated on Mondays)
Friday’s Commitment of Traders report showed little change in the Managed Money net position. Funds are seen to be net short about 56k futures/options contracts.
For the full report check out Short Squeeze? - Blue Line Futures
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