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Fundamentals: Corn futures rallied yesterday on the back of bearish USDA report (a fundamental rejection), which fits within our recent thesis that a lot of the bad news is priced in and there was very little value selling in the low 320’s. Do not confuse that with being bullish. Yesterday’s USDA report showed the U.S. corn yield at 181.8, above the average estimate of 180.5, but within the range of estimates. Production came in at 15.278 billion bushels, above the average estimate. 2019/202 ending stocks came in at 2.228 billion bushels, below the average estimate. 2020/2021 ending stocks came in at 2.756 billion bushels, below the average estimate. Generally, big crops get bigger, but the storm earlier in the week could make this year an exception. Satellite imagery suggests that there were 10-12 million acres affected, which could mark a top in production estimates. Generally, we write storms and most weather events off as isolated events, but this deserves some attention.
Export sales: Net sales of 377,200 MT for 2019/2020 were up noticeably from the previous week and up 18 percent from the prior 4-week average. For 2020/2021, net sales of 553,100 MT.
Technicals: In the bast several reports we have stated: “Our bias is already at Neutral because the chart remains bearish, but we do not see any value in selling at these levels.”. The market rejected “new” bearish fundamentals and rallied, often setting up for follow through and a relief rally when funds are heavily short. Is the low in for December corn? We would not go that far. There is a gap up near 344 that has the attention of technicians, this was previously a congestion area for prices, with a lot of interaction between buyers and sellers.
Previous Session Bias: Neutral
Resistance: 343 ¾-346****
Pivot: 337 ½-339 ¼
Support: 326-330***, 320-322**
Fundamentals: Soybeans rallied following yesterday's USDA report, which showed monster numbers for yield and production, a fundamental rejection. USDA has the U.S. soybean yield at 53.3 bushels per acre, above the average analyst estimate of 51.2 and well above the July estimate of 49.8. Production estimate came in at 4.425 billion bushels, above the average analyst estimate. 2019/2020 ending stocks came in at 615 million bushels, a hair below the average estimate. 2020/2021 ending stocks came in at 610 million bushels, above the average estimate of 524. Generally, big crops get bigger, but the storm earlier in the week could make this year an exception. Satellite imagery suggests that there were 10-12 million acres affected, which could mark a top in production estimates. Generally, we write storms and most weather events off as isolated events, but this deserves some attention.
Export sales: Net sales of 570,100 MT for 2019/2020 were up 65 percent from the previous week and 96 percent from the prior 4-week average. For 2020/2021, net sales of 2,839,400 MT were primarily for China (1,705,000 MT), unknown destinations (872,500 MT),
Technicals: November soybeans managed to defend our 4-star support pocket this week, we have had that defined as 866 ¼-873. As mentioned in previous reports and in our Tech Talks, 4-star levels are inflection points for us, and in this case a MUST HOLD pocket for the Bull camp. The market rallied back into our pivot pocket by the close, we have defined that as 883-887 ¾. If the Bulls can achieve consecutive closes above this pocket, we would look for an extension back near the psychologically significant $9.00 handle. More significant resistance comes in from 905 ½-911 ½. September options expiration next week may play a roll in price action, this will be something to keep an eye on going into next week’s trade.
Previous Session Bias: Neutral
Resistance: 905 ½-911 ½****
Support: 883-887 ¾***, 866 ¼-873****
Chicago Wheat (September)
Fundamentals: Wheat prices were unable to advance yesterday, despite strength in corn and beans. Yesterday’s USDA report showed 2020/2021 ending stocks at 925 million bushels, about 21 million bushels below the average estimate.
Export sales: Net sales of 367,900 metric tons (MT) for 2020/2021 were down 39 percent from the previous week and 45 percent from the prior 4-week average.
Technicals: The Bear camp remains in full control as the market continues to struggle to get back above the technical and psychologically significant pocket from 496 ½-500. Consecutive closes above here would neutralize our bearish bias. The new downside objective for the Bear camp (assuming they can defend resistance) comes in at 471, a retest of the contract lows from June 26th.
Previous Session Bias: Neutral/Bearish
Resistance: 517 ½-523***, 532-535 ½***, 546 ¼-551 ¾***
Pivot: 496 ½-500
Support: 481**, 471***
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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.