Happy WASDE day!
Average Yield Estimate: 167.3 bushels per acre
Average Production Estimate: 13.602 billion bushels
Average US Carryout Estimate: 1.799 billion bushels
Fundamentals: Corn drifted lower yesterday on another lackluster export sales number, 487,900 metric tons. This was up from the 4-week average and within the range of expectations, but the bull camp NEEDS to see these numbers consistently exceed expectations to make a meaningful dent on supplies. We are nearly 50% behind last years export pace; can you imagine where prices would be if we had a normal growing season?
Techncials: Yesterday’s move lower sparked technical selling, taking prices to their lowest levels since the September 30th Quarterly Stocks report. The breakdown has moved our bias to neutral as we await today’s WASDE data. The fundamentals are pretty blah, and the technicals are reflecting that. If the bulls cannot reclaim ground above 377-381 ½ we could see the market bleed into the mid 360’s and possibly retest the contract lows. Obviously, a lot is hinging on today’s report.
Previous Session Bias: Bullish/Neutral
Resistance: 390-392 ¾***, 400-402 ½***, 412 ¾-417 ¼****
Pivot: 377-381 ½
Support: 363-366***, 350-352 ¼****
Average Yield Estimate: 46.6 bushels per acre
Average Production Estimate: 3.513 billion bushels
Average US Carryout Estimate: .429 billion bushels
Fundamentals: Yesterday was a choppy trade as market participants tried to wrap their heads around the mixed trade headlines and prepare for today’s WASDE report. Reports early in the morning came from China, suggesting that both sides had agreed to lifting tariffs. That was not confirmed from the US until about 8 hours later; only to have that confirmation walked back after the close. These headlines make short term trading difficult and need to be taken with a grain of salt. Export sales came in at 1,807,400 metric tons, 41% above the 4-week average. Fundamentals and technicals remain constructive.
Technicals: The market tested and held technical support again yesterday, that has been defined as 921-928 ½. The bulls do not want to see a retest to this lower end of this support, that could lead to further technical selling. On the resistance side of things, the bulls need to see consecutive closes back above 940-491 ½. This could spark a swift move towards recent highs, 953-959 ½.
Previous Session Bias: Bullish
Resistance: 940-941 ½***, 953-959 ½****, 973 ¼-979 ¼***
Support: 921-928 ½***, 899-906 ¾ ****
Chicago Wheat (December)
Average US Carryout Estimate: 1.035 billion bushels
Fundamentals: We continue to be a little more pessimistic on Chicago wheat futures, especially if the dollar continues rally off their recent lows. Export sales yesterday morning came in at 360,600 metric tons, down 27% from last week and 14% below the 4-week average.
Technicals: The market broke back below our pivot pocket which has the bear camp in control to start today’s session. If the bears continue to defend 515 ¼-517 ¼ on a closing basis, the remain in control. Their first objective comes in from 496 ¼-500 ¾. This pocket represents the 50, 100, and 200 day moving average, along with previously important price points.
Previous Session Bias: Neutral/Bearish
Resistance: 521 ¾-523 ¾**, 535-538 ½****
Pivot: 515 ¼-517 ¼
Support: 496 ¼-500 ¾****, 485 ½-489 ¼***
Kansas City Wheat (December)
Technicals: We continue to be more friendly on the Kansas City contract, but the bulls need to see a move out above the recent highs and our resistance pocket, 437-439 ½. A failure to do so won’t be bearish, but we would expect more of a sideways trade. Technical support comes in from 411 ½-415 ½. This pocket represents trendline support, a key retracement, and the 50-day moving average.
Previous Session Bias: Bullish/Neutral
Resistance: 437-439 ½***, 454-457 ¾****
Support: 411 ½-415 ½****, 397-400***, 380*
Technicals: December cotton futures staged a strong rally yesterday but has so far failed to gain traction today. With prices smack dab in the middle of our technical support and resistance pockets, not much has changed. We remain optimistic on prices, but the bulls need to not only defend support, but make a move out above resistance sometime in the next week.
Previous Session Bias: Neutral/Bullish
Resistance: 65.85-66.05****, 68.35-68.60***
Support: 62.91-63.39****, 59.58-60.79***, 56.59-57.55****
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