Time to buy the dip?
May 30, 2018
Yesterday’s Close: July corn futures finished yesterday’s session down 6 ¾ cents, this after trading in a range of 12 ½ cents. Funds were estimated to have been sellers of 22,000 contracts on the day.
Fundamentals: Yesterday afternoon’s crop progress report showed that the corn crop is 92% planted, this was in line with most expectations. The first good/excellent rating of the year was much better than the average analyst expectation. Good to excellent ratings through May 27th came in at 79% good/excellent, this is a tie for the second-best rating in history which dates back to 1994. The highest rating was 81% in 1991. As of right now, weather looks favorable for producers, so we would not be surprised to see those high numbers stay intact. Though it is still early in the season, it is possible we see funds and producers take some risk off the table following that number. The only data on the calendar today is the weekly EIA report which will give us an updated look at ethanol production and stocks.
Technicals: The market failed to attract buyers above the top end of the range which triggered a massive round of profit taking and risk reduction from funds and farmers. In yesterday’s report we cautioned that the overnight trade should be taken with a grain of salt and producers should consider becoming more active. We remain optimistic on price, but a pullback is healthy for the chart. Our first support pocket from 395 ½-397 ¼ was tested and has so far held. This pocket represents the lows from a week and a half ago, the 50-day moving average, and a key Fibonacci retracement level. So long as the bulls can defend this pocket they will remain in control. A break and close below could trigger another round of selling down to 388-390 ½; this pocket represents the 100-day moving average and the 50% retracement on the year.
Resistance: 401-403 ¾**, 408 ¼-412 ¼****, 425 ¾-426 ½**
Support: 395 ½-397 ¼***, 390 ½**, 379 ½-383 ½****
Yesterday’s Close: July soybean futures finished yesterday’s session down 8 ¾ cents, this after trading in a range of 21 ½ cents. Funds were estimated to have been sellers of 9,000 contracts for the day.
Fundamentals: Yesterday’s crop progress report showed that 77% of the crop is planted, this was inline with expectations but well ahead of last years 65% and the five-year average of 62%. Weather will continue to be very important over the coming months as the crop continues to emerge and develop. One of the bigger headlines yesterday was that the US would in fact impose tariffs on the Chinese (all this tariff talk is becoming a carousel) which stoked concerns that China would respond with retaliatory tariffs. The Brazilian trucker strike seems to be winding down which should relieve a little pressure from the market.
Technicals: The market tried but failed to get out above last weeks highs, that coupled with bearish fundamental headlines spurred long liquidation and producer selling. The market found support yesterday between our support pocket from 1027 ¾-1031, this pocket represents the 100-day moving average and the 50% retracement (middle of the range) from the January lows to the March highs. The market has broken down below that in the overnight and early morning session, but we need to see more volume to confirm price. If the floor does indeed open up softer, we would expect to see prices press towards....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Yesterday’s Close: July Chicago wheat futures finished the session down 6 ½ cents, this after trading in a range of 22 ½ cents. Funds were estimated sellers of 8,500 contracts for the day.
Fundamentals: Yesterday’s crop progress report showed that winter wheat ratings improved to 38% good/excellent, this is up from 36% last week. Weather will continue to be pivotal to this market in the near term. If the winter wheat crop continues to show signs of life, we could see a bigger premium evaporate from the market. We will continue to watch the Kansas City contract as it will likely be the leader. Spring wheat is now 91% planted and is 63% emerged. Yesterday’s export inspections came in at the top end of estimates.
Technicals: The volatility in wheat has been picking up for the past few sessions and it doesn’t look to have changed in the overnight and early morning session. Yesterday’s sharp reversal after being rejected from levels not seen since July spared a round of profit taking which has spilled into today’s session. Keep in mind that volume confirms price, so the floor open will be more telling. First technical support remains intact 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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