Weather, geopolitics and crop reports will drive grain markets for the remainder of the summer, reports Oliver Sloup.
Corn (ZCZ)
Yesterday’s Close: December corn futures finished yesterday’s session down 1.5¢, trading in a range of 9¢. Funds were estimated sellers of 7,500 contracts.
Fundamentals: Corn futures have been choppy the last two sessions, trading both sides of unchanged as market participants wait for new news to develop and give this market more clarity. Perhaps we see weather premium work itself back into the market before the weekend, this has been a trend over the last three Fridays. We will get some minor headlines over the next few weeks, the weekly exports, crop progress, etc., but the big-ticket item will be the Aug. 12 U.S. Department of Agriculture report. Export sales this morning came in at 507,800 metric tons, within the range of expectations.
Technicals: Volume in yesterday’s trade was the lightest since July 5, offering little conviction of price on either side. The market failed to gain traction above our pivot pocket yesterday.
Soybeans (ZSX)
Yesterday’s Close: November soybean futures finished yesterday’s session up 3.5¢, trading in a range of 11.25¢. Funds were estimated buyers of 4,500 contracts.
Fundamentals: As with corn futures, soybeans continue to chop around as participants wait for new news to give the market new direction. We would not be surprised to see the market hold water into the weekend where we may get weather premium and trade talk premium; US delegates are headed to China on Monday. Export sales this morning came in at 145,600 metric tons, within the range of expectations.
Technicals: The market is forming a wedge pattern, posting higher lows and lower highs. Technicians usually look for this to lead to a bigger directional move once the market breaks out from the wedge. The direction of the breakout will likely be fundamentally driven in this case.
Wheat (September)
Yesterday’s Close: September wheat futures finished yesterday’s session up 10¢, trading in a range of 11.5¢. Funds were estimated buyers of 5,000 contracts.
Fundamentals: Export sales this morning came in at 659,800 metric tons, above the top end of expectations. We continue to believe that rallies will be mostly relief and will be opportunities to sell. We have been working with clients in the KC/Chicago wheat spread for the past few weeks, selling Chicago and buying the KC contract; at times getting heavier on the short side of Chicago.
Technicals: The market is working into our first resistance pocket.
Oliver Sloup provides technical levels on all markets throughout the week at BlueLineFutures.com.
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