Fundamentals: Corn futures were initially higher on the Sunday night open, futures have been in retreat for much of the overnight and early morning session, trading near the levels we were at pre-USDA report. That USDA report had a bearish tilt to it, but the market managed to rally on short-covering, indicating a fundamental rejection. The Bulls must get follow through in today’s session to confirm that, a failure to do so could spark additional long liquidation from the Funds. Friday’s Commitments of Traders report showed Managed Money was net sellers of 43,548 futures contracts, (24,718 longs liquidated and 18,830 new short positions), shrinking their net long position to 202,202 futures contracts (256,533 longs and 54,331 shorts). With the USDA report behind us and weather being a diminishing factor, attention will weigh heavy on money flow and technicals.
Technicals: The market tripped stops below the psychologically significant $5.00 handle, the rallied as much as 26 ½ cents. The ability to rally on a back of a bearish report is encouraging, but the inability to find follow-through is a caution flag. Prices are right back to the low end of our pivot pocket, 507. If the Bulls fail to defend this through the close, we could see the trend of long liquidation continue.
Previous Session Bias: Neutral/Bearish
Resistance: 529 ½-533***, 551 ½-555 ½****
Pivot: 507-514 ¼
Support: 493 ½-497 ½ ***, 477 ½-480 ¾****
Fundamentals: Soybeans were able to rally on the back of Bearish/Neutral USDA report which could be an indication that near-term selling pressure has exhausted itself. Friday’s Commitments of Traders report showed Managed Money were net sellers of 11,517 futures contracts (6,569 long liquidation and 4,948 new shorts). This puts their net long position at 54,300 futures contracts (86,702 longs and 32,402 shorts), a very modest position. Weather still has some influence on the market but is diminishing rapidly. Crop Progress will be out after the close, expectations are that conditions had a slight improvement from last week’s 57% Good/Excellent rating.
Techncials: Soybeans managed to rally following Friday’s USDA report, but stalled out against our first resistance pocket, 1300 ½-1306 ¾. As with corn, the lack of follow-through is a bit of a caution flag, but the overnight sessions can be misleading as it is, so the floor open and after will be where our focus is. If the Bulls can defend Friday’s low, we could see additional short covering take us back to and possibly above our technical resistance pocket. A failure to defend the lows from Friday open the door for a potential retest of the June 17th low, 1240 ½.
Previous Session Bias: Bearish/Neutral
Resistance: 1300 ½-1306 ¾***, 1325 ¾-1333****
Pivot: 1286 ¼-1292
Support: 1270-1277 ¼**, 1262 ¾***, 1240 ½****
Technicals: Chicago wheat traded into our 4-star support pocket on Friday, we had that defined as 675-680 ½. 4-star support levels can be great for traders regardless of their bias. If you’re bearish and been short, this is the spot to look at reducing. If you’re bullish and want to be long, this is the spot to consider stepping in. A break and close below support opens the door for a run at 650-652.
Previous Session Bias: Neutral/Bearish
Resistance: 718 ½-723 ½***, 744 ¾-750****, 770 ½**
Support: 675-680 ½****, 650-652 ½.
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