Corn Futures (May)
Fundamentals: May corn futures made several attempts to rally last week but failed to hold those attempts through the close, which has kept the funds comfortably short. Friday’s Commitment of Traders report showed funds net short position at 99,925 contracts. This is a decent-sized position, but far from a record. The fundamental headwinds remain stout, keeping the bear camp in full control, fundamentally and technically. We are also entering planting season, so you can expect the weather to become a common headline.
Technicals: Early last week we were optimistic. We could see a bit of a short-covering rally on a near term double bottom. The small rally and failure on Thursday set the tone for Friday’s weakness which has bled into the new week. Finding technical support when we are trading in uncharted territory becomes more of a guessing game, as there is nothing to go off in terms of previous interactions between buyers and sellers. This leads us to the continuous chart, taking us back to the August lows of 2016. Though the fundamentals and technicals continue to lean bearish, our bias remains Neutral to start the week.
Previous Session Bias: Neutral
Resistance: 343 ¼-344 ¾**, 354-356 ¾***
Support: 325**, 313 ¾-315 ¼***
Fundamentals: May soybean futures broke lower last as the hope for bullish news fell flat, after Tuesday’s USDA report. Friday’s Commitment of Traders report showed funds net long position of 22,906 contracts, versus the net short position of 4,715 we saw in the previous week. The recent weakness in soybean meal hasn’t done the bull camp any favors. This will be something to keep a close eye on to start this week’s trade.
Technicals: The chart was set up for the bulls ahead of last week’s USDA report, but the inability to breakout above resistance led to a retest and eventual breakdown of support. That took us down to 858, an area that we liked buying on the first test. The inability to see springboard relief led us to scratch that idea and sit back on our hands into the weekend. If the bulls fail to reclaim ground above 854-858 ¾ on a closing basis, we could see a retest of the March lows, 821.
Chicago Wheat (May)
Fundamentals: Chicago wheat retreated last week but remains constructive (more so technical than fundamentally). Weather conditions in the Black Sea region are still in the need of rain which is supportive for prices. Around the world you are also seeing countries build their reserves and stockpiles. Friday’s Commitment of Traders report showed funds holding a net long position of 36,756 contracts, an increase of 16,613 contracts.
Technicals: The market pulled back into our 4-star support on Thursday, we had defined that as 540 ½-542 ½. We suggested this would be the spot for shorts to reduce and longs to re-enter positions. This support pocket remains intact, and very pivotal for price direction. The bulls must avoid a retest to these levels, if they do, it is possible that we see a bigger technical breakdown. First resistance today comes in from 564-568 ½. If the bulls can chew through this pocket, we would expect to see an extension towards they psychologically significant $6.00 handle, in sort order.