Grain Planting Intentions Under Water

05/21/2019 1:22 pm EST

Focus: COMMODITIES

Oliver Sloup

, Blue Line Futures

Farmers across the Midwest are behind in planting due to extremely wet conditions notes Oliver Sloup of BlueLineFutures.com.

Corn (CN)

Yesterday’s Close: July corn futures finished yesterday’s session up 5.5¢, trading in a range of 5.75¢. Funds were estimated buyers of 30,000 contracts.

Fundamentals: Weekly export inspections yesterday morning came in at 820,916 metric tons, within the range of expectations. The Crop Progress Report was released after the close, that came in at 49% complete, well below the five-year average of 80%. Areas like Iowa and Nebraska made big strides, but Illinois (among others) is a serious question mark with only 24% of the crop in the ground, the slowest pace on record.

Getting this late into the planting season you start to have a serious conversation regarding a decrease in acres and the potential for below trend yield. You have to go back to the early/mid 1990’s to find a planting pace like this, hybrids performance will be the big wild card, putting a bigger emphasis on crop progress through the developmental stages. If the crop is not developing adequately, we could see the funds not only continue to cover their short position but flip long.

Technicals: The market continues to march higher as the weather market picks up steam, leaving several gaps on the chart. Our bias remains bullish and although you could make the case for too far too fast, this is not a market to try and step in front of. First resistance today comes in from $3.98 ¼ to $4.01, This pocket represents a key retracement, the top end of the range in from December-February, and the psychologically significant $4.00 handle.

Bias: Bullish

Resistance: 398 ¼-401***, 408 ½-410 ½****

Support: 388 ¼**, 382 ¾**, 370 ¾-373 ½***

Soybeans (SN)

Yesterday’s Close: July soybean futures finished yesterday’s session up 10.5¢, trading in a range of 14¢. Funds were estimated buyers of 8,500 contracts on the day.

Fundamentals: Export inspections yesterday morning came in at 497,070 metric tons, within the range of expectations. Crop Progress was reported after the close, that came in at 19% complete, far behind the five-year average pace of 47%. The big concern areas include Illinois, Indiana, and Ohio, typically 40-50% complete but all stuck in the single digits. If we don’t get a break in the weather, we could see acres come off in a meaningful way. The ongoing headwind continues to be the lack of progress on trade with China.

Technicals: The market has officially recovered all of Friday’s losses, bring us right back to technical resistance. We have defined that as $8.45 to $8.50, consecutive closes above this pocket would lend hand to a short covering rally towards $8.82 ¼. On the support side of things, the bulls must defend $8.16 ¾- to $8.20 ½. A break and close below here opens the door for a retest of contract lows.

Bias: Neutral

Resistance: 845-850***, 865-867**, 887 ¼**, 896 ½-901 ¾****

Support: 816 ¾-820 ½****, 800-805 ½***, 791**

Wheat (July)

Yesterday’s Close: July wheat futures finished yesterday’s session up 17.5¢, trading in a range of 16¢ (gap higher Sunday night). Funds were estimated buyers of 9,000 contracts on the day.
Fundamentals: Short covering continues to be the name of the game as corn and wheat futures feed off of each other’s momentum. Money flow and technicals will continue to be our focus. Weekly export inspections came in at 757,704 metric tons, the high end of expectations. Crop Progress showed that spring wheat is 70% complete, above estimates. Winter wheat conditions improved 2% to 66% good/excellent.

Technicals: The market closed in our resistance pocket yesterday, defined as $4.79 ¾ to $4.82 ½. The market has moved north of here in the overnight/early morning trade, this must be defended to keep the momentum alive. If the bulls can achieve consecutive closes above here, we would expect to see the market work towards the technically and psychologically significant $5.00 handle.
Bias: Bullish/Neutral

Resistance: 500-505 ½****, 516 ¼**, 527 ¼***

Pivot: 479 ¾-482 ½

Support: 463-468***, 435-436 ¼***, 426-427**

Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com.

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