Daily Grain Market Update (5.16.18)

Published on: 12:59PM May 17, 2018

CORN (July)


Yesterday’s Close:  July corn futures finished the day down 3 cents, this after trading in a range of 5 ¾ cents.  Funds were estimated sellers of 9,000 contracts.


Fundamentals:  Producer selling likely played a role in some of yesterday’s weakness.  Early morning strength is likely on the back of wheat catching a bid.  The weekly EIA report that came out yesterday showed ethanol production at 1.058 million barrels per day.  This compares to the 1.040 million we saw last week and the 1.027 we saw for the same time last year.  Ethanol stocks continue to fall, with this weeks read coming in at 21.5 million barrels, down from 22 million barrels in the previous week.  Export sales this morning came in at 985,700 metric tons for 2017/2018 and 129,200 metric tons for 2018/2019.  The total of 1,114,900 metric tons was towards the top end of estimates which came in from 750,000-1,200,000 metric tons. 


Technicals:  The market has found some strength in the overnight and early morning session, but the bulls will want to see confirmation through volume on the floor open.  Not much has changed on the chart over the last 24 hours so support and resistance levels remain intact.  First support going forward comes in from 394 ¼-397 ¼.  This pocket contains the 50-day moving average, recent lows, and a key retracement from the years range.  A break and close below will neutralize our bullish bias.  On the resistance side, 407-408 ½ is the barrier the bulls need to break down to encourage another leg higher.


Bias: Bullish


Resistance: 407-408 ½***, 425 ¾-426 ½**

Support: 394 ¼-397 ¼***, 390 ½**, 379 ½-383 ½****




Yesterday’s Close:  July soybean futures finished the day down 17 cents, this after trading in a range of 19 ¾ cents.  Funds were estimated to have been sellers of 12,500 contracts.


Fundamentals:  Market participants will continue to keep a closes eye on news out of Washington today as China and the US continue their discussion on trade.  We will also be keeping a close eye on soybean meal as it will likely have a lot of influence on price action in soybeans.  Export sales this morning came in at 281,900 metric tons for 2017/2018 and 224,700 metric tons for 2018/2019.  The total of 506,600 metric tons was within the range of estimates of 400,000-1,000,000 metric tons. 


Technicals:  The market traded to its lowest level since the original “tariff scare” back on April 4th.  Our 4-star support level remains intact from 988 ¾-994 ¾.  In our minds, this pocket represents an area for shorts to cover and buyers to find value.  On the resistance side of things, 1013-1016 is the first barrier the bulls need to overcome, this pocket represents a key retracement on the year, the 200-day moving average, along with previously important price points.   The bears remain in control until we start seeing consecutive closes above this pocket.   


Bias: Bearish/Neutral


Resistance: 1013-1016**, 1026 ½-1028 ¼***, 1040-1042 ½**

Support:  988 ¾-994 ¾****, 965 ¼-969 ½***


WHEAT (July)


Yesterday’s Close:  July wheat futures finished the day up 1 ½ cents, this after trading in a range of 7 ¾ cents.  Funds were estimated to have been sellers of 1,500 contracts.


Fundamentals:  Dry weather in Australia is getting some accolades for the recent recovery in prices, but we feel this is more of a technical relief rally than anything.  We are continuing to keep a close eye on the USD which continues to gain strength; this could keep a lid on commodities.  Conversely, if the dollar starts to retreat we could see that spark a buying spree.  Weekly export sales this morning came in at 63,100 metric tons for 2017/2018 and 131,700 metric tons for 2018/2019.  The total of 194,800 metric tons was within the range of estimates from 100,000-500,000 metric tons.   


Technicals:  Prices are catching a bid this morning which has us close to filling the gap from May 10th which comes in at 505 ¾.  A conviction close above this level will neutralize our bias, but as of now this is just a relief rally in our opinion.  If the bulls can chew through resistance, we could see the market rally back towards 523-524 ¼.  A failure to achieve a breakout will encourage additional pressure.  First technical support comes in at 493 this morning.  The intermediate term target remains 477 ½-482 ¾. 


Bias: Bearish


Resistance: 502 ¾-505 ¾***, 523-524 ¼**, 543 ½-545***

Support: 477 ½-482 ¾****, 467 ¾**, 458 ¾-463***


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