Grain Complex Surges on Bullish WASDE Report

07/12/2019 12:00 pm EST

Focus: COMMODITIES

Oliver Sloup

, Blue Line Futures

The entire grain rallied yesterday on a bullish World Agriculture Supply and Demand Estimate (WASDE) Report, notes Oliver Sloup.

Corn (ZCZ)

Yesterday’s Close: Corn futures finished yesterday’s session up 8.75¢, trading in a range of 18.25¢. Funds were estimated buyers of 18,000 contracts.

Fundamentals: Yesterday’s WASDE report showed 2019/2020 ending stocks at 2.010 billion bushels, well above the average analyst estimate of 1.65 billion bushels. The market rallied after an initial spike lower and the fact that we did trade positive with conviction following a bearish report is bullish in itself. Attention will turn back to weather as the crop continues to develop. Hot and dry forecasts could continue to add support to the market.

Technicals: December corn futures traded technically sound yesterday, trading between the pivot and resistance nearly perfectly. The market is pressed up against a wider than usual technical resistance pocket.

Soybeans (ZSX)

Yesterday’s Close: Soybean futures finished yesterday’s session up 4.75¢, trading in a range of 12.25¢. Funds were estimated buyers of 6,000 contracts.

Fundamentals: Yesterday’s WASDE report showed 2019/2020 ending stocks at .795 billion bushels, below estimates of 0.830 million bushels. With the report behind us, attention will turn back to crop development. Weekly crop progress reports, though hated by many, will become increasingly important in the coming weeks.

Technicals: The market managed to close above technical resistance.

Wheat (ZWU)

Yesterday’s Close: September Chicago wheat futures finished yesterday’s session up 16.25¢, trading in a range of 22.75¢. Funds were estimated buyers of 8,000 contracts.

Fundamentals: Yesterday’s WASDE report showed wheat stocks at 1.000 billion bushels, below the average estimate of 1.038 billion bushels. Global wheat production has been lowered on the back of problematic weather. Although the report was friendly, we remain skeptical on wheat near term. We have been working with clients on entering the KC/Chi wheat spread over the past few sessions.

Technicals: The market surged higher yesterday, taking prices closer to $5.25 ¾, which represents resistance.

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