With Bolton Departure, Next Trade Headline Will Carry More Weight for Soybeans

Crop progress reports in line with expectations
Wheat futures rallied nearly 30 cents in the last week on short-covering
Bolton was a notorious hawk and a headwind for a trade deal with China
Grain futures market update

Grain futures market update

Corn Futures (December)
 

Fundamentals: The USDA announced another sale to Mexico yesterday, this time for 278,200 metric tons. Reports out yesterday that National Security Adviser, John Bolton is out of the white house put a pop in the Ag commodities. Bolton was a notorious hawk and a headwind for a trade deal with China. Bolton’s departure will likely change the tone going forward, evident right away as a headline from China was released shortly after saying that they would purchase more US agricultural products to sweeten the pot. If we didn’t have a USDA report tomorrow, this would probably be a more bullish headline. Estimates are for production range from 12.620-14.003 billion bushels. Yield estimates range from 162.0-171.5. Ending stocks are estimated to be near 1.930.

Technicals: Previous support now becomes resistance; the bulls need to reclaim ground above 363 ¾. Consecutive closes above here could spark a wave of short-covering taking prices back towards the top end of the near-term risk range, 377-381. A failure to find follow-through momentum in today’s session would be another dagger to sentiment and could lead to new contract lows.

Bias: Neutral/Bullish

Previous Session Bias: Neutral/Bullish

Resistance: 377-381**, 392 ¾***, 405-407**

Pivot: 363 ¾

Support: 338 ¾-343**

 

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Soybeans Futures (November)

Fundamentals: November soybeans caught a bid yesterday on the back of reports that National Security Adviser, John Bolton, would be leaving the White House. Bolton was a notorious hawk and a headwind for a trade deal with China. The next headline that says the US and China will be meeting to discuss trade (which is inevitable) will suddenly carry a little more weight. With that said, we still think that the can will be kicked down the road until we get closer to the US election, but this certainly paves the path to get the ball rolling in the right direction. If it weren’t for a USDA report tomorrow, we would probably have seen a bigger reaction. Estimates for production range from 3.434-3.745 billion bushels. Yield estimates range from 45.5-49.0. The average analyst estimate for ending stocks comes in at 655 million bushels.

Technicals: Yesterday’s run higher opens the door for a retest of the top end of the recent range 880-885. This pocket also represents the 50 and 100 day moving average. Consecutive closes above here would mark higher highs, ending the three-month trend of lower highs and lower lows. On the support side of things, 850-852 ½ is still the MUST hold pocket for the bull camp. Consecutive closes below here opens the door for a potential drop and retest of contract lows, 815 ½.

Bias: Neutral/Bullish

Previous Session Bias: Neutral/Bullish

Resistance: 880-885**, 891 ½-896 ¾***, 921-924***

Support: 850-852 ½****, 839 ¾-843 ¾**, 815 ½****

Wheat Futures (December)

Fundamentals: December wheat futures managed to work higher on broad-based strength, following headlines that John Bolton would be leaving the Trump Administration. This opens the door for a more productive discourse with China. Wheat ending stocks are estimated to be near 1.020 billion bushels.

Technicals: In yesterday’s report we had listed first resistance as 480-483 ½, this was tested and held perfectly. If the bulls can use the momentum from the previous two-sessions to break through, we could see an extension towards their technically and psychologically significant $5.00 handle.

Bias: Neutral

Previous Session Bias: Neutral/Bearish

Resistance: 480-483 ½**, 493-500****, 525 ¾-531 ½****

Support: 469 ½-470**, 442-446**, 427 ¼****

 

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