Grain Express | Post-USDA Ag Action
Fundamentals: Market spectators and participants were anticipating fireworks; fireworks are what we got. The USDA showed prospective planting acres at 91.144 million, well short of expectations which sent futures locked limit up in a matter of minutes. Finishing the session limit up gives us expanded limits today, that is 40 cents. Carryout came in within the range of estimates. All in all, this is the report the Bull camp needed to reignite the optimism (for new crop too) and could offer support for the next few months. Fund positions limits are expanded which gives them room to add, which could in turn put a squeeze on commercials/hedgers who are near record net short. We have seen this scenario in other markets over the years, and it lays the groundwork to take prices past fair value. We do not know if it is going to play out like that, but we would not rule it out.
Weekly Export Sales: Net sales of 797,300 MT for 2020/2021 were down 82 percent from the previous week and 46 percent from the prior 4-week average.
Technicals: The market gaped higher in the overnight trade, taking us to new contract highs, which puts us in uncharted territory. As mentioned in previous reports and Tech Talks, we find technical support and resistance levels based on the previous interactions between buyers and sellers. With prices at new highs, there is no roadmap, and it becomes more of a momentum/money flow trade. $6.00 would be the psychologically significant target on the radar of market participants.
Previous Session Bias: Neutral
Resistance: 585*, 600*
Support: 564-572***, 550**, 536-540***
Fundamentals: Yesterday’s USDA report gave us a limit up move as prospective planting acres came in well below the average analyst estimate, 87.6 million vs estimates of 90.10 million. This has offered additional support to the new crop contract in the overnight/early morning trade. Carryout numbers were in line with expectations which has old crop running out of gas in the morning session. We are expecting the volatility in futures and futures spreads to continue for the foreseeable future.
Weekly Export Sales: Net sales of 105,800 MT for 2020/2021 were up 4 percent from the previous week, but down 54 percent from the prior 4-week average.
Technicals: Soybean futures gaped higher in the overnight session but have so far failed to hold that follow through momentum and mark new contract highs. Previous resistance now becomes our pivot pocket, 1434 ½-1436 ½. The Bull camp wants to defend this pocket ahead of the three-day weekend, to help keep the technical momentum from yesterday’s trade. A failure here may encourage profit taking ahead of the long weekend.
Previous Session Bias: Neutral
Pivot: 1434 ½-1436 ½
Support: 1390-1400**, 1364 ¼-1364 ¾**
Chicago Wheat (May)
Fundamentals: Yesterday’s USDA report showed all wheat acres at 46.36 million, above the average analyst estimate. Ending stocks came in at 1.315, within the range of expectations. All in all, this was a bearish report for wheat, but the spillover momentum from corn and beans helped propel wheat higher. If corn and beans start to consolidate, we would expect wheat to start rolling over.
Weekly Export Sales: Net sales of 250,100 metric tons (MT) for 2020/2021 were down 27 percent from the previous week and 22 percent from the prior 4-week average.
Technicals: Chicago wheat futures sprang higher post USDA report, tagging the 100-day moving average and then failing against our 3-star resistance pocket, which we defined in yesterday’s report as 626-631 ½. This is also the area that trendline resistance comes in. If the Bulls fail to achieve consecutive closes above here, we would expect to see sellers step back in and take us back towards the psychologically significant 600 handle.
Previous Session Bias: Neutral/Bearish
Resistance: 626-631 ½***, 644 ½-649 ½***
Pivot: 607 ¼-610 ½
Support: 596 ½-600**, 569-572 ¾**
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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.