Chinese Slowdown Sends Grains Lower

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Fundamental Snapshot

China

Weaker than expected growth in China was reported overnight, with real estate leading the way to the downside. The weaker than expected data prompted their Central Bank to announce a surprise interest rate cut. We are seeing the slower growth data have ripple effects in commodities this morning with oil down over 5% and soybeans down over 3%, just to name a few.

U.S. Dollar

The US Dollar is firming on the back of poor Chinese data, continuing the relief rally from Friday. The U.S. dollar was able to defend 105, which was previous resistance in May and June and the eventual breakout point in July. If the dollar continues to rally, it could be a headwind to some commodities.

Weather

Weather throughout the Midwest looks cooler and wetter for the next 1-2 weeks. For some problem areas, it may be too little too late. The conversation around weather will be shifting to South America in the coming weeks as they begin planting.

Corn

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December corn futures “broke out” above resistance on Friday which took prices to the 50-day moving average and our next resistance, 640 1/2. Futures are weaker this morning, giving back all of the gains from Friday and then some. This takes prices back to trendline support. A failure to defend this area could open the door for a retest of the psychologically significant $6.00 handle.

Bias: Neutral

Previous Session Bias: Neutral

Resistance: 638-643**, 650-655***

Pivot: 620

Support: 584 ¼-587 ½***, 561 ¾**, 542 ¼-547 ¾***

Soybeans

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November soybean futures had a big reversal on Friday, taking prices into positive territory following a bearish USDA report. The news out of China over the weekend has offset Friday’s bullish reversal and has taken prices back near first support, 1394-1400. A failure to defend this pocket could lead to another leg lower. There is still a gap on the chart from July 26th, that comes in from 1349 1/4-1356.

Bias: Neutral

Previous Session Bias: Neutral

Resistance: 1463 ¼**, 1481-1489***, 1500-1507 ¾****, 1529 ¾-1536 ½****

Pivot: 1440-1450

Support: 1394-1400***, 1349-1356****, 1300**

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