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Grain Market Update (4.2.18)

Published on: 12:59PM Apr 02, 2018

CORN (May)

 

Last Weeks Close:  May corn futures finished Thursday up 14 ½ cents, trading in a range of 15 ½ cents, funds were estimated buyers of a whopping 43,000 contracts; this is the largest buying spree on record (2011).  For the week May futures finished up 10 ¾, trading in a range of 17 ¼ cents.  Friday’s Commitment of Traders report showed funds were net sellers of 98,537 contracts but they remain net long 108,839; this was the fourth largest 1 week selling spree on record.  Keep in mind that the Commitment of Traders data is compiled from March 20th-27th and does not include Thursdays rally. 

 

Fundamentals:  The bulls in the corn market got a lot of help from the USDA last week when they announced their expected acres number.  They have planted corn acres coming in at 88.026 million acres, this is down 2.14 million acres from the previous year; majority of the estimates were hovering right around 90 million acres.  Quarterly stocks were not as bullish, coming in at 8.888 billion bushels, this is the largest number we have seen in several decades.  With this report behind us, attention will start shifting more towards weather in the corn belt.  We remain optimistic on corn prices as we head into planting season.

 

Technicals:  The market managed to trade above technical support in the first half of last week which gave buyers an excellent opportunity from a risk/reward perspective.  Last week we mentioned that a breakout above 382-383 would give a green light to new highs on the year and we are sticking with that.  The market is testing our next resistance pocket which comes in from 393 ¾-395 ¼.  Above this pocket there is additional resistance....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

 

SOYBEANS (May)

 

Last Weeks Close:  May soybean futures finished Thursdays session up 26 ¾ cents, trading in a range of 38 ¼ cents.  Funds were estimated buyers of 25,000 contracts; this is the fourth largest single day buying spree on record (2011) and the biggest since May 10th 2016.  For the week May beans were 16 ¾ cents higher, trading in a range of 38 ¼ cents.  Friday’s Commitment of Traders report showed that funds were net sellers of 11,229 contracts, this puts their net long at 173,011.  Keep in mind that the Commitment of Traders data is compiled from March 20th-27th and does not include Thursdays rally. 

 

Fundamentals:  Soybean bulls had their prayers answered last week when the USDA released a bullish prospective plantings number.  The USDA has soybean acres at 88.982 million acres, this was well below the bottom end of the range and it’s the first time we have seen more bean acres than corn acres in 35 years.   There is still some attention on the South American crop but attention will start to turn towards weather in the states.  If this rally does continue, perhaps we see that buy some more acres into planting season.  Quarterly stocks came in at 2.11 billion bushels, this was at the high end of estimates with the average estimate coming in at 2.04 billion bushels. 

 

Technicals: Last weeks USDA report did some nice patch work on the very bearish chart and has now neutralized things as we start a new week, month, and quarter.  The market is testing first technical resisatnce this morning from 1063-1066 ½, if the market can chew through this pocket on a closing basis, we will likely see an extension towards new highs on the year, putting us above the 1082 ½ print we saw exactly a month ago.    A failure to get legs here could stall things and that may entice some long liquidation.  If the market closes back below 1049 we would expect that to accelerate the selling pressure; the next target would be....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

 

WHEAT (May)

 

Last Weeks Close:  May wheat futures finished Thursdays session up 6 ¼ cents, trading in a range of 14 ¼ cents.  Funds were estimated buyers of 7,000 contracts on the day.  For the week, May futures were 8 ¼ cents lower, trading in a 22 ¼ cent range.  Friday’s Commitment of Traders report showed funds were sellers of 21,815 contracts, expanding their net short to 78,107 futures.  Keep in mind that the Commitment of Traders data is compiled from March 20th-27th and does not include Thursdays rally. 

 

Fundamentals:  Thursdays USDA report had all wheat acres at 47.339 million acres, this would be the second lowest since 1919; however, this was above trade estimates of 46.3 billion acres.  Wheat stocks came in at 1.494 billion bushels this was within the range of expectations with the average trade estimate coming in at 1.486 billion bushels.    Wheat was certainly a beneficiary of the bigger moves in corn and beans, how much longer can wheat hang on to the coat tale is the questions. 

 

Technicals:  The wheat chart managed to hold together thanks to a friendly USDA report last week, but the bears remain in clear control here.  We are in a bit of a no-man’s land here as price clings to the 100-day moving average.  The bulls must see a close back above 463 ¾-467 ¾.  This pocket represents resent highs, the 50-day moving average, and a key Fibonacci retracement level.  If the bulls can chew through this pocket, that will neutralize the chart.  A close back above 478 ¾ will start to favor the bull camp.  A failure to gain momentum this week will likely invite more sellers into the market.  A close back below 440 opens the door to....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

 

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