Ag Markets Waiting on Crop Reports

Grain and agriculture market traders are waiting on this week’s crop production and WASDE reports from the USDA, notes Oliver Sloup.

Corn (ZCH)

Fundamentals: Corn futures finished Friday’s session little changed, carrying over into a quiet Sunday night/Monday morning trade. All eyes will be on tomorrow’s Crop Production and WASDE report, likely setting the tone for the rest of the year. Ending stocks will be the big-ticket item, estimates range from 1.190-1.960 billion bushels, the average being 1.861. Friday’s Commitment of Traders (COT) report showed funds bought 30,935 contracts, trimming their net short position to 85,137. All in all, the wires are slow and there is little news to get people excited, this may be reason enough to be excited. There’s an old saying, “Never short a quiet market”, similar concept to being cautions when everyone is buzzing about a market. Our bias will remain neutral until we see the technical landscape shift.

Technicals: Corn futures struggled and ultimately failed against our resistance pocket in the first half of last week’s trade, $3.81 ¼ to 3.82 ¾. That resistance remains intact and is the pocket the bulls need to see consecutive closes above which could spark a short covering rally. On the support side of things, the bulls need to defend $3.73, a break and close below here opens the door for a potential retest of contract lows at $3.65 ¾.

Bias: Neutral
Previous Session Bias: Neutral
Resistance: 391 ½-396****
Pivot: 381 ¼-382 ¾
Support: 373-375***, 365-365 ¾****

Soybeans (ZSF)

Fundamentals: Soybean futures caught a bid in the back half of last week’s trade on the back of China waiving import tariffs on U.S. soybeans. Focus will now be on tomorrow’s Crop Production and WASDE report. Estimates for carryout range from .392-.522 billion bushels, the average .474 being little changed from last month’s .475. Friday’s COT report showed funds sold 56,078 contracts, expanding their net short position to 99,019. Recent selling from the funds has been more aggressive than 2018, when the trade war was initiated.

Technicals: Soybeans caught a bounce in the back half of last week’s trade after testing and holding our four-star support pocket, $8.65 to $8.69 ½. We talked about that being a buying opportunity in our daily reports and interviews, looking for a relief rally towards $8.94 to $8.95 ¾, which was achieved on Friday. The market is moving north of this pocket in the early morning trade, but we will wait to see how the floor opens, when we will get more participation.

Bias: Neutral/Bearish
Previous Session Bias: Neutral/Bearish
Resistance: 900**, 909 ½-913***
Pivot: 894-895 ¾
Support: 865-869 ½****

Chicago Wheat (ZWH)

Fundamentals: Chicago wheat futures were soft last week on profit taking and lack of bullish news. We have been very cautious and wary of Chicago wheat in the mid-$5 range. We think there is more opportunity in the Kansas City contract, a narrative that we’ve had for several months now; legging in and out of each side of the spread against technical levels.

Technicals: The market came within a stone’s throw of our technical support pocket on Friday, we defined that as $5.15 ¼ to $5.18. This pocket represents a key retracement, the 50-day moving average, and other previously important price points. A break and close below could take the market closer to the physiologically significant $5.00 handle. Resistance comes in from $5.25 ¾ and $5.30. A conviction close above this pocket could encourage a move to new highs for the recent move.

Bias: Neutral/Bearish
Previous Session Bias: Neutral/Bearish
Resistance: 538-539 ¼**, 544-546 ½****
Pivot: 525 ¾-529 ¼
Support: 515 ¼-518 ¾***, 504 ½-508 ½**

Kansas City Wheat (March)

Technicals: Kansas City wheat came into technical support on Friday, presenting what we believe to be a good risk/reward buying opportunity. That support comes in near 430, representing trend-line support from the contract lows, previously important price points, along with the 50 and 100 day moving average. First resistance comes in near 438 ¼, a close above here could take us back to and possibly above our resistance pocket from 449 ½-451 ¼.

Bias: Bullish/Neutral
Previous Session Bias: Bullish/Neutral
Resistance: 449 ½-451 ¼***, 465 ¼****
Support: 428 ¾-432 ¾****, 422 ¾-423**, 411 ¾-413****

Cotton (March)

Technicals: March cotton futures sprang higher on Friday on optimism around trade and tariff waivers. Some of that optimism is being sucked back out of the market today with prices retreating towards the technically significant 65.00 handle. If the bulls can defend this area, they have a slight advantage. A closer below puts the ball in the bears court.

Bias: Neutral
Previous Session Bias: Neutral
Resistance: 65.98-66.14***, 66.88-67.13****, 69.07-69.20***
Pivot: 64.52-65.00
Support: 62.81-63.73***, 60.30-60.56***

Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com. Sign up for a complimentary two-week trial of 1 or all 4 of our daily Blue Line Express commodity reports!