Grain Market Update (4.26.18)
Apr 26, 2018
Yesterday’s Close: July corn futures finished the session up 5 cents, trading in a range of 7 cents for the day. Funds were estimated buyers of 15,000 contracts.
Fundamentals: There was not much new news behind yesterday’s move higher. Sure, there were headlines that crossed after the fact, but price generally precedes news. We continue to believe there is opportunity to the long side and the recent technical retracement offered great value for funds to get more aggressive on the buy-side. Spill over strength from the wheat complex certainly didn’t hurt anything either. Export sales this morning came in at 620,500 metric tons. Estimates were from 1,000,000-1,600,000 metric tons. Yesterday’s weekly EIA ethanol report showed production fell to 985,000 barrels per day, this is down from 1,009,000 in the previous week. This decline is somewhat expected as seasonal maintenance takes place.
Technicals: July futures saw a nice move above technical resistance yesterday which should keep the momentum in their corn over the near term. Previous resistance now becomes support, we have that coming in from 390 ¼-393. The next resistance pocket doesn’t come in until 400 ½-4002 ¾. With that said, we have had a nice rally since last Friday and we would not be surprised to see some consolidation here in the near term. The market is in a bit of a wedge since the middle of March. We have seen lower highs and higher lows since that time. This formation typically sets up for a bigger directional move, either a breakout or a breakdown. We continue to feel the odds favor the bull camp at this point in time.
Resistance: 400 ½-402 ¾****, 411-412 ¾***, 425 ¾-426 ½**
Support: 390 ¼-393***, 379 ½-383 ½****, 377 ½**
Yesterday’s Close: July soybean futures finished the day up 5 ¼ cents, trading in a range of 13 cents. Funds were estimated buyers of 6,000 contracts.
Fundamentals: Export sales this morning came in at 537,800 metric tons, this compares to the expected range of 800,000-1,400,000 metric tons. The bulls need to see China step back into the market as they have been absent for a while now. Chinese absence has kept a lid on any significant rally and could keep that lid on until they show their face again. We continue to keep a close eye on weather. It looks like farmers in the corn belt will have a window in the next 1-2 weeks, this has alleviated some of the concern of acres moving from corn to beans which has supported prices here this week.
Technicals: The market has staged a nice rally after finding technical support early on in the week from the 50% retracement and 100 day moving average. Prices are now trading above our next line in the sand which comes in at 1042 ½. Though this is encouraging for the bulls, they will want to see confirmation through volume on the floor open. If we see follow through buying, we could see the market make a run for the 50-day moving average which comes in at 1051 this morning. Without any new news expected, the market may struggle to find near term momentum above this price; a consolidation would be healthy.
Resistance: 1051***, 1060 ¾-1064 ½**, 1077-1078***
Pivot: 1042 ½
Support: 1025 ¾-1027 ¾***, 1013-1016***
Yesterday’s Close: July wheat futures finished the day up 14 cents, trading in a range of 17 cents. Funds were estimated buyers of 10,500 contracts on the session.
Fundamentals: Winter wheat saw some follow through buying on ideas that the crop may be worse than previously expected. Some of the key growing areas got some good moisture recently but there is a concern that it was too little too late. The wheat tour kicks off on May 1st, this will be something to keep a close eye on. Export sales this morning came in at 577,900 metric tons, the expected range was for 50,000-550,000 metric tons.
Technicals: The market broke out above our technical resistance pocket from 486-488 ½ which invited momentum buyers to jump on board and press prices back above the $5 handle. The bulls will want to maintain ground above 494-496 ¾ to keep the ball rolling in their direction. A close below this pocket could lead to additional pressure towards previous resistance (486-488 ½). On the flip side, significant resistance comes in from 508 ½-510 ½. A break and close above this pocket opens the door to a run at new highs.
Resistance: 508 ½-510 ½**, 524 ¼-531 ¾****
Support: 486-488 ½****, 472 ¾-475 ¼***, 459-461 ¾****
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