Soybean Futures Traders On Fence Between China Demand and Fundamentals

Grain futures market update

Grain futures market update

Corn Futures (March)

Fundamentals: Friday’s USDA report had the US corn yield coming in at 168.0 bushels/acre, above the average estimate and last month's report. The USDA estimates harvested acres to be at 81.482, in line with estimates. Production at 13.692bb was slightly higher than expected. Quarterly stocks were at 11.389bb, lower than estimates and last month's report, helping offset the bearishness tied to increased production. Friday’s Commitment of Traders report showed funds bought back 1,569 contracts, trimming their net short position to 80,887.

Technicals: All last week we talked about how the bulls MUST defend 377-380 on a closing basis, which it managed to do. This pocket represents previous contract lows from May, a gap from December 12th, along with other previously important price points. This significant technical support coupled with a neutral USDA report sparked a mild round of short-covering, taking us back to our pivot area and 100-day moving average, 385-386 ½. The bulls want to see consecutive closes above here to sleep easy, but the more significant resistance pocket comes in from 390 ½-392. A conviction close above here would likely trigger a bigger wave of technical short covering. Our bias going into this week’s trade is Bullish/Neutral, closes above technical resistance would change that to outright Bullish.

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Soybeans (March)

Fundamentals: Friday’s USDA report was mostly bearish with yield, production, and ending stocks coming in higher than expectations. What helped prop the market up after an initial dip was technical support and optimism around this week signing of the Phase-1 trade deal, which would ratchet back tariffs, making it more of a truce than a substantive deal. Friday’s Commitment of Traders report showed funds bought 4,318 contracts, putting them in the black by 1,159 contracts.

Technicals: March soybean futures dipped lower on the release of the report but managed to hold first support and finish the session in positive territory. We listed first support as 933 ¾-937 ¼, this pocket represents several previously important price/volume points over the last month. Going into the report, we were hoping to see a break below here to be able to buy March beans in the mid-920’s. We didn’t get that break and don’t see much value in a speculative buy or sell right here, keeping our bias to start the week at Neutral. From the hedging side of things, it would probably be wise to protect the downside near term.

Bias: Neutral

Previous Session Bias: Neutral

Resistance: 968 ½-970****

Pivot: 950 ½-955

Support: 933 ¾-937 ¼***, 920-922 ¾****

 

Wheat (March)

Fundamentals: Chicago wheat futures were choppy on Friday as market participants digested the latest traunch of information from the USDA. Winter wheat plantings were mostly in line with expectations, 30.804, a 111-year low. Ending stocks were also within the range of expectations. Friday’s Commitment of Traders report showed funds bought 417 contracts, narrowly increasing their net long to 27,687 contracts.

Technicals: The trend of higher lows and higher highs remains intact and a retest of the double top highs from June remains probable. That resistance pocket comes in from 572 ¼-573 ½. Perhaps the market searches for stops above this pocket, but we would look at this as an opportunity to sell on the first test. On the support side of things, 554 ½-557 ¼ has been our pivot pocket. This was tested and held following Friday’s report, keeping it intact to start this week’s trade.

Bias: Neutral

Previous Session Bias: Neutral

Resistance: 572 ¼-573 ½***

Pivot: 554 ½-557 ¼

Support: 536 ¼-538 ¾***, 527-529 ¼****

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