Grains Stuck in a Range

02/07/2019 11:42 am EST

Focus: COMMODITIES

Oliver Sloup

, Blue Line Futures

Tomorrow’s U.S. Department of Agriculture report will hopefully be a catalyst to get grain markets moving again, says Oliver Sloup, vice president of Blue Line Futures.

Corn (CH)

Yesterday’s Close: March corn futures finished yesterday’s session down 0.5¢, trading in a range of 1.75¢.

Fundamentals: Export sales this morning came in at 503,100 metric tons (for week ending 12/27). Tomorrow’s U.S. Department of Agriculture report will hopefully be the catalyst to get this market moving again. U.S. production estimates are coming in and range from 14.343-14.760 billion bushels. Yield estimates are coming in from 176.5-180.0 bushels/acre. U.S. ending stocks are projected to come in anywhere from 1.621-1.787 billion bushels.

Technicals: If you saw yesterday’s trading range, you probably know that nothing has changed on the technical front. The market continues to be a stick in the mud. Support and resistance pockets have remained intact for the better part of the last three weeks. We see that support coming in from $3.75 ¾-$3.78 ½. On the resistance side of things, $3.82-$3.84 ½. A breakout or breakdown opens the door for an additional 5¢ in short order.

Bias: Bullish

Resistance: 382-384 ½**, 388-390 ½****

Support: 375 ¾-378 ½***, 371 ¾-372 ½****

Soybeans (SH)

Yesterday’s Close: March soybean futures finished yesterday’s session up 1¢, trading in a range of 5¢.

Fundamentals: Export sales this morning came in at 1,050,000 metric tons (for week ending 12/27). The big-ticket item this week will be tomorrow’s USDA report. Early estimates for U.S. production range from 4.490-4.620 billion bushels. Yield estimates range from 51.0-52.5 bushels per acre. The average estimate for U.S. ending stocks is near 0.925 million bushels. We would not be surprised to see the market retreat initially but feel a pullback would be a buying opportunity. Once the report is behind us, attention focus back on trade talks with China, which are expected to continue next week. We will look for a silver lining to emerge from that.

Technicals: With the market little changed and in a tight range yesterday, many of the technicals remain intact from yesterday’s report. The market continues to hover around the 200-day moving average and key retracement from $9.19-$9.21 ¾, a pivot pocket for us. First meaningful support comes in from $9.10 ¾-$9.13 ¼. If the market breaks below here, we could see prices work towards $8.97-$8.99 ½. This is a pocket where we would want to be aggressive buyers on the first test.

Bias: Bullish

Resistance: 931 ¼**, 941-947****

Pivot: 919-921 ¾

Support: 910 ¾-913 ¼***, 897-899 ½****

Wheat (WH)

Yesterday’s Close: March wheat futures finished yesterday’s session down 3.25¢, trading in a range of 7¢.

Fundamentals: Export sales this morning came in at 593,000 metric tons (for week ending 12/27). Market participants are looking forward to tomorrow’s USDA report. The average analyst estimates for U.S ending stocks comes in at 0.989 billion bushels. Total wheat acres are estimated to be 32.128 million. We will be watching corn and beans close for the remainder of the week as it will likely spillover into wheat and provide a headwind or a tailwind for prices.

Technicals: The market made higher highs yesterday, only to finish on the lows of the session. That reversal is cause for concern in the very near term, but we will be looking to be buyers on a deeper correction (for the KC contract too). First support this morning comes in from $5.15 ¼-$5.18 ½. If the bulls can defend this, it will continue the trend of higher lows.

Bias: Neutral/Bullish

Resistance: 529-532***, 537 ¾-541 ¾****

Support: 515 ¼-518 ½*** 508-510**, 499-501 ¼****

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