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Grain Market Update (4.5.18)

Published on: 13:13PM Apr 05, 2018

CORN (May)

 

Yesterday’s Close:  May corn futures finished the day down 7 ½ cents, trading in a range of 17 cents.  Funds were estimated sellers of 30,000 contracts on the session.

 

Fundamentals: Tariff talk dominated the ag industry yesterday morning as early morning headlines led some market participants to sell first and ask questions later.  At the end of the day, China is not a huge buyer of US corn, less than 1% of our exports go to China.  A lot of the pressure was likely spill over from beans which is a whole different story (see soybean section).  Yesterdays weekly EIA ethanol report showed ethanol production at 1.038 million barrels per day, this was a hair lower from last week but still up nearly 2% from the previous year.  We are expecting the volatility to linger as we approach the weekend.  Volatility often times invites more volatility as market participants try to keep their books in balance.  We will start keeping a closer eye on weather here in the states as we producers start to ramp things up for planting.  We do have a USDA report next week, we hope to have estimates for you over the weekend.  Export sales this morning came in at 898,0000 metric tons, this compares to the expected range of 1,000,000-1,300,000 metric tons; last weeks read came in at 1,353,000 metric tons.

 

Technicals:  The market blew through the 50 and 200 day moving average early yesterday morning and tested our support pocket from 368 ¾-371 ¾.  The market worked the way it should, and we saw price discovery happen before our eyes when the floor opened, and we got more volume.  We ended up stabilizing above the 50 and 200 day moving average which is encouraging for the bulls.  That dip in everything from corn to cattle was an excellent opportunity to buy; as the old saying goes “buy when people are fearful and sell when people are greedy”.  The bulls want to see a close back above 382 ¾-385 today to encourage prices to work back towards....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

 

SOYBEANS (May)

 

Yesterday’s Close:  May soybeans finished the day down 21 ¾ cents, trading in a range of 58 ¼ cents.  Funds were estimated sellers of 21,000 contracts for the session.

 

Fundamentals:  Soybean futures finished well off of the lows yesterday as market participants digested the news that China had released a list of retaliatory tariffs, a list of 106 products that included soybeans.  We mentioned last week that we would not be surprised to see China jawbone prices lower to step in and be buyers.  Yesterday morning the USDA announced a sale of 129,000 tons of soybeans sold to China, and another 325,000 to unknown (unknown is usually another way to say China). We have been taking a lot of the tariff talk with a grain of salt because we have questions with regards to whether China can afford to not buy our beans going out past six months.  Bean prices in South America caught a bid yesterday which in turn helped support our prices.  Outside of the US and South America the options for China seem somewhat limited.  As with corn, we will start to turn attention towards weather in the states, some less than ideal conditions could start to move some acres to soybeans.  This mornings export sales came in at 1,133,000 metric tons, this compares to the expectations of 600,000-900,000 metric tons; last weeks read came in at 318,000 metric tons.

 

Technicals:  Soybean futures ripped through all the major moving averages and two key Fibonacci retracement levels yesterday before stabilizing into the afternoon to finish the day right near where we opened last Thursday.  We have been bearish on the market for other reasons than China tariff talk and used yesterday mornings move lower to work with clients in reducing short exposure; especially in the options where premiums were juiced.  We will likely sit on our hands here before looking to put some of those positions back on.  First resistance today comes in at 1029 but the more significant pocket comes in from....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

 

 

WHEAT (May)

 

Yesterday’s Close:  May wheat futures finished the session down ¾ of a cent, trading in a range of 14 ½ cents.  Funds were estimated sellers of 5,000 contracts on the day.

 

Fundamentals:  Wheat futures held up extremely well in the face of the blood bath in corn and beans yesterday morning.  If corn and beans can stabilize it will give wheat a green light to work higher.  Colder temperatures helped provide that support as concerns linger over the winter wheat crops potential; we will l continue to keep a closes eye on KC as it will likely be the leader.  Export sales this morning came in at 109,000 metric tons this compares to the expected range from 200,000-500,000 metric tons; last weeks came in at 354,000 metric tons.

 

Technicals: Looking at the chart you would have thought it was just another day in the grain markets.  May Chicago wheat continued to hug the 100-day moving average and trade within the recent range.  Tuesdays and Wednesdays price actions were incredibly constructive for prices in our mind and do have us changing our bias from neutral to neutral/bullish.  There is some headwind from....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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