The Grains Complex, II,IIII

Stocks largely recovered from big losses early in the day to close mixed. June E-mini S&P 500 futures traded as low as 2591.25 but were trading around 2625 near the cash close while the Dow Jones futures traded in a nearly 500 point range. Implied volatility, which had spiked during the morning price decline, fell back to near yesterday’s levels in late afternoon trading.

Heading into tomorrow’s release of the April employment report, we’ll take a look at the activity in the 10-Year Treasury options from a couple different perspectives. First, prices in the 10-year rose today, signaling lower yields at the long end of the interest rate curve. Next, implied volatility, which sometimes can be heightened heading into an economic release such as the jobs report, actually declined slightly today and remains near historically low levels.

Weather :

The updated Drought Monitor shows 57.24% of the CONUS was drought free on May 1, vs. 85.69% last year at this time. The drought in the norther Plains had not yet become a concern last year. The Southern Plains drought is still getting worse, with 8.89% of the CONUS in D3-D4 drought vs. 0.13% a year ago. The area is seeing some rain this week, but not enough to break the drought.


Corn futures are UNCH to fractionally lower this morning. They ended the Wednesday session steady to a penny lower. Analysts are expecting USDA to show 0.7-1 MMT in weekly old crop corn export sales this morning, with new crop at a net reduction of 50,000 to 150,000 MT in sales. EIA showed ethanol production for the week of April 27 averaging 1.032 million barrels per day. That was 47,000 bpd above the previous week. Ethanol stocks totaled 22.142 million barrels, 441,000 more than the week prior, with the Midwest the only region to show a reduction. INTL FCStone estimates the Brazil corn crop at 83.9 MMT, 2.6 MMT below their previous estimate and well below the USDA’s 92 MMT. During the month of April, Brazil exported 114,889 MT of corn, well below March and 25.76% lower than last year.

Corn futures closed the Thursday session with gains of 1 to 3 1/2 cents. Old crop corn export sales during the week of 4/26 exceeded most expectations at 1.02 MMT. That was a 46.31% jump from the previous week and 3.23% larger than this time last year. Mexico was the lead buyer @ 310,100 MT, with Columbia buying 148,200 MT. New crop sales totaled 49,331 MT. Shipments during that week totaled 1.474 MMT, down 13.3% from last week but 7.28% above a year ago. US corn exports during March totaled 6.49 MMT, down 4% from a year ago but the second largest March total. China sold 3.313 MMT of corn from state reserves on Thursday, totaling 83.77% of the offered amount.

May 18 Corn closed at $3.99 1/2, up 3 1/2 cents,

Jul 18 Corn closed at $4.08, up 3 cents,

Sep 18 Corn closed at $4.15 1/2, up 2 3/4 cents

Dec 18 Corn closed at $4.22 1/4, up 2 1/2 cents

Chart Points: The weekly continuation chart took out the 2017 high at $3.945. Round number resistance at $4 is the next concern for the bulls. We are also operating under a triangle breakout to the upside, with counts in the $4.20’s. These apply to May futures until expiration. July contract has a Gann 1×4 resistance line at $4.05 3⁄4. If we can clear that area, the Fibonacci expansion count is up around $4.18. Bollinger midline support is $3.95 1/4. RSI is overbought. December futures have rising regression channel support at $4.0575. The quants would be expected to sell it in the $4.23’s if given the opportunity. MACD is still bullish at the longer 9-12-26 setting. See this December chart snippet:


Soybean futures are currently steady to 1 ½ cents higher after seeing losses of 9 to 10 1/4 cents on Wednesday. Soy meal was down $3/ton, with front month soy oil up 29 points. The average trade guess for US old crop soybean export sales for the week of 4/26 is 300,000-600,000 MT, with new crop expected at 150,000-350,000 MT. Sales of soy meal are seen at 150,000-350,000, as 8,000-25,000 MT is projected for soybean oil. Brazilian soybean production is expected to hit 117 MMT for 17/18 according to estimates from INTL FCStone, up 1.1 MMT from their April projection. Soybean exports by Brazil during April totaled 10.259 MMT, 16.4% larger than March but 1.64% lower than April 2017.

Soybean futures rallied in the last half hour of trading to settle 8 to 10 1/2 cents higher. Soy meal was down $1.60/ton, with front month soy oil 21 points in the green. This morning’s USDA Export sales report indicated 416,259 MT in old crop soybean export sales. That was within estimates, as it was up 12.1% from last week but down 43.2% from a year ago. New crop sales exceeded expectations at 469,900 MT. Exports during the week of 4/26 totaled 691,239 MT, 55% larger than last week. Sales of soy meal totaled 246,006 MT for 17/18 and 61,200 MT for 18/19, with soybean oil tallied at 44,499 MT. Official shipments of soybeans during March were shown at 3.24 MMT by US Census, 4% larger than last year. Of the total 1.045 MMT was exported to China.

May 18 Soybeans closed at $10.43 1/4, up 10 1/2 cents,

Jul 18 Soybeans closed at $10.53 1/4, up 10 1/4 cents,

Aug 18 Soybeans closed at $10.56 1/4, up 10 1/2 cents,

Nov 18 Soybeans closed at $10.49 1/2, up 8 3/4 cents,

May 18 Soybean Meal closed at $398.40, down $1.60,

May 18 Soybean Oil closed at $30.58, up $0.21

Chart Points: Downtrend resistance is at $10.65 on the weekly continuation chart. The Bollinger midline support is $10.17 1/4. These numbers still apply to May futures. Weekly stochastics are neutral. The 100-day moving average support on the July chart is $10.27. Overhead trendline resistance is the upper Bollinger Band at $10.70 3⁄4. Stochastics are neutral. The November contract has lateral resistance at $10.60. Regression channel support is $10.28 3/4. The upper Bollinger Band resistance held the market on Monday and is resistance today @ $10.56.

Soy Meal: Spot meal futures traded at the highest price since July 2016 on Tuesday. July contract stochastics are bullish. Prices set a new life of contract high overnight and are attempting a triangle breakout. The measured move would be $38/ton if the breakout is sustained, i.e. to $423! The jury is still out on the breakout. Uptrend support is $377.80. MACD is bullish.


Wheat futures are trading 4 to5 cents lower in all three markets this morning. They were 2 to 4 cents higher in most KC and MPLS contracts on Wednesday. CBT SRW was 1 to 4 cents lower in the front months, with deferred contracts higher. The USDA Export Sales report will be released this morning at 7:30 AM CDT, with most analysts expecting to see 0-300,000 MT in old crop wheat sales. That is within range of last week, as new crop sales are seen at 100,000-300,000 MT. The second day HRW wheat quality tour average was 35.2 bpa, below 46.2 last year. The tour was into the driest areas today before bending back toward Manhattan for the finale on Thursday. Russian FOB prices on April 27 hit $213/ton, up $5 in the previous 3 weeks. Dryness in Australia and the Black Sea region is supportive to global wheat prices at the moment.

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