Daily Grain & Cotton Commentary (11.12.19)

Published on: 08:15AM Nov 13, 2019

Corn (December)

Fundamentals: December corn futures caught a bid yesterday on the back of decent export inspections number and limited bearish news. Inspections came in at 560,000 metric tons, towards the top of the range but still lower than that 800,000 metric tons needed each week to hit the USDAs target. Year over year we are down 61%. Yesterday’s Crop Progress report showed corn harvest is 66% complete, the third slowest pace on record (1992 - 53%, and 2009 – 42%). If you calculate this out, you get around 4.25 billion bushels left to harvest. Production concerns are very real, but the lack of demand has continued to be a major headwind for the market. Brazil is scooping up a lot of new business and setting records for their export business, taking away from the U.S. If they start drawing down on supplies, we could see the shift back to U.S. corn, but it may take a few months.

Technicals: Yesterday’s rally was a sigh of relief for the bull-camp, but they still have a lot of work to be done on the chart. Previous support is now resistance, we have defined that as 377-381 ¼. We believe the bears will remain in control until we see consecutive closes above this pocket. On the support side of things, 366-368 ¼ is the pocket we are watching closely. A failure here could lead to a flush towards the contract lows of 352 ¼. We want to be friendly the market, but the chart hasn’t been able to justify it.

Bias: Bearish/Neutral

Previous Session Bias: Bearish/Neutral

Resistance: 377-381 ½***, 390-392 ¾***, 400-402 ½***

Support: 366-368 ¼***, 350-352 ¼****

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Soybeans (January)

Fundamentals: January soybeans finished yesterday’s session near unchanged on the lack of new news. President Trump spoke at the Economic Club of New York with regards to trade, but it was not enough to spark a move one way or the other. Yesterday’s Crop Progress report showed soybean harvest is 85% complete, the slowest pace since 2009, 79%. Weekly export inspections came in at 1,332,000 metric tons, within the range of estimates, 800,000-1,600,000 metric tons. Year over year we are up 9%.

Technicals: Monday’s breakdown did a lot of technical damage, leaving the bull-camp to fight for their lives as we inch towards the last line of defense. The bulls MUST defend technical support from 909 ½-913. We believe this pocket represents a buying opportunity on the first test, but you won’t want to give it much room below. A failure to defend this pocket would confirm a bearish head and shoulders pattern, leaving the door open for drop towards 894-895 ¾. On the resistance side of things, the bulls first objective is to reclaim ground over 919 ½-922 (previously support).

Bias: Neutral/Bullish

Previous Session Bias: Neutral/Bullish

Resistance: 919 ½-922***, 940-941 ½***

Support: 909 ½-913****, 894-895 ¾**

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Chicago Wheat (December)

Fundamentals: Wheat futures caught a bid yesterday on the back of good export inspections and weather concerns, sparking short covering from the funds. Export inspections came in at 529,000 metric tons, above the top end of expectations and well above last week’s 294,000 metric tons. This puts us up 23% year over year. The Kansas City contract was the leader as that spread continues to narrow.

Technicals: From the technical perspective we would be sellers of Chicago and buyers of the Kansas City contract, on an individual basis, but the spread is a great way to play it too. The market rallied back into our resistance pocket yesterday, we had defined that as 515 ¼-517 ¼ (the high was 517 ¼). The bears have an advantage so long as they can continue to defend this pocket. ON the support side of things, there’s not a lot until 499 ½-503 ¾. This pocket represents the 50, 100, and 200 day moving average, along with previously important price points and the psychologically significant $5.00 handle.

Bias: Bearish/Neutral

Previous Session Bias: Bearish/Neutral

Resistance: 515 ¼-517 ¼**, 521 ¾-523 ¾***, 535-538 ½****

Support: 496 ¼-500 ¾****, 485 ½-489 ¼***

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Kansas City Wheat (December)

Technicals: Kansas City wheat futures saw their biggest rally in a month on the back of weather concerns sparking a short covering rally. This is another constructive development on the technical landscape, marking higher lows for the week and higher highs. The upper end of our resistance pocket was tested and is holding so far, we have defined that as 437 ¼. If the bulls can achieve a conviction close above resistance, there’s the potential to add 20 cents to prices in a relatively short amount of time.

Bias: Bullish/Neutral

Previous Session Bias: Bullish/Neutral

Resistance: 437 ¼-439 ½***, 454-457 ¾****

Support: 427**, 411 ½-415 ½****, 397-400***, 380*

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Cotton (December)

Technicals: We wish there would be something more interesting to say about the cotton chart, but it has been consolidating between our support and resistance pockets for the last month. We have defined support as 62.91-63.39 and resistance as 65.85-66.05. We remain optimistic on prices and like buying the low end of the range on the first test, but the bulls need to get something going to feed the momentum traders. If we cannot breakout above resistance in the near term, we could see a further decline.

Bias: Neutral/Bullish

Previous Session Bias: Neutral/Bullish

Resistance: 65.85-66.05****, 68.35-68.60***

Support: 62.91-63.39****, 59.58-60.79***, 56.59-57.55****

 

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