The entire grain complex dropped more than 10¢ each yesterday on a better than expected Crop Progress report, notes Oliver Sloup.
Corn (ZCZ)
Yesterday’s Close: December corn futures finished yesterday’s session down 12.5¢, trading in a range of 18.75¢.
Fundamentals: In yesterday’s report we went neutral on corn for the first time since turning bullish two-months ago. The premium built into prices in the back half of the week was excessive and that has led to a round of profit taking to start the week. Yesterday’s Crop Progress report did little to support the market as good/excellent ratings improved 1% from the previous week, average estimates were for ratings to drop.
Technicals: In yesterday’s report we noted: “Corn technicals looked strong in the back half of last week’s trade, but we would not be surprised to see the market chop around over the next two weeks. A choppy trade is tough for directional traders but will present some great opportunities for those willing to be nimble. Prices are working off of the overnight highs, if this carries over into the floor open, we could see prices retest $4.47-$4.50, previous resistance.”. With some help from yesterday’s Crop Progress report we are breaking below that support pocket.
Soybeans (ZSX)
Yesterday’s Close: November soybean futures finished yesterday’s session down 11.25¢, trading in a range of 18¢.
Fundamentals: In yesterday’s report we turned our bias to Neutral/Bearish after the market ran out of new news to break the market out above technical resistance. Yesterday’s Crop Progress report is keeping that downward momentum intact. That report showed that good/excellent ratings increased 1%, many were expecting a drop of 1%. U.S.-China trade talks are set to resume this week via phone, but the market isn’t counting on this being substantive.
Technicals: The market is hovering near the 100-day moving average at $9.08 ½, a continuing breakdown below here leaves the door open for a retest of support.
Wheat (ZWU)
Yesterday’s Close: September wheat futures finished yesterday’s session down 14.25¢, trading in a range of 25.25¢.
Fundamentals: We have been bearish wheat since last week. Ample global supplies and relatively dismal demand has been a headwind at these elevated prices. As mentioned, several times over the last week, we have been working with clients in the KC/Chi wheat spread. Buying KC and selling Chicago; some clients doing the spread with equal contracts and some heavier on selling Chicago.
Technicals: In yesterday’s report we talked about a breakdown below the 200-day moving average ($5.14 ½) opening the door for a run at support.
