The Grains Complex, II,IV

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Today in history (1932) the mobster Al Capone begins serving an eleven-year prison sentence for tax evasion.

Outside Markets: US equities traded in a big range again today as an initial sell-off after a weaker than expected jobs number quickly turned around.

Led by Apple, which was up nearly 4% in late afternoon trading after Warren Buffett disclosed a bigger stake in the company.

The Nasdaq was up nearly 2% while the Dow and S&P 500 were both up about 1.5%. 

WTI Crude Oil futures were up again with the June contract trading near $70/barrel while Treasury futures were little changed.

WEATHER: The odds are good for above normal temps in the CONUS (48 states) over the next two weeks. The precip forecast remains on the dry side for the southern US, with odds skewing drier in the 8-14 day period. Some above normal rain chances in the Great Lakes region next week are expected to diminish in the May 11-17 period. If the forecast holds up, US planting progress should be caught up by the 20th.


Corn

Corn futures ended the week with most contracts steady to 1 3/4 cents lower on Friday. Nearby May was 2.37% higher on the week. Friday’s CFTC Commitment of Traders report indicated the large spec funds in corn futures and options adding 63,440 contracts to take their net long position to 186,317 contracts during the week ending May 1. China sold another 1.963 MMT of 2014 and 2015 corn from state reserves on Friday, which was just 48.84% of the total put up for auction. Buenos Aires Grain Exchange estimated the Argentina corn harvest at 32.5% complete, ahead of the 29.7% average.

May 18 Corn closed at $3.98 3/4, down 3/4 cent,

Jul 18 Corn closed at $4.06 1/4, down 1 3/4 cents,

Sep 18 Corn closed at $4.13 3/4, down 1 3/4 cents

Dec 18 Corn closed at $4.21, down 1 1/4 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 a count to $4.29. These apply to May futures until expiration. July contract spiked 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 and the next Gann line is $4.20. Bollinger midline support is $3.96. RSI and stochastics are overbought. December futures have rising regression channel support at $4.075. 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.

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Soybeans

Soybean futures gave back Thursday’s gains plus some to close with 12 to 16 1/2 cent losses in the nearby contracts. Soy meal was down $4.00/ton, with front month soy oil 2 points lower. Managed money in soybean futures and options added 6,953 contracts to their net long position of 177,047 contracts last week. Meanwhile in soy oil, they were at their largest recorded net short position of -73,540 contracts on Tuesday. No deal was reached in two days of negotiations between the US and China, with both sides suggesting some minor issues had been solved but none of the major requests. BAGE estimated the soybean crop in Argentina at 61.8% complete, in front of the normal pace of 56.4%.

May 18 Soybeans closed at $10.27 1/4, down 16 cents,

Jul 18 Soybeans closed at $10.36 3/4, down 16 1/2 cents,

Aug 18 Soybeans closed at $10.40, down 16 1/4 cents,

Nov 18 Soybeans closed at $10.37 1/4, down 12 1/4 cents,

May 18 Soybean Meal closed at $394.40, down $4.00,

May 18 Soybean Oil closed at $30.56, down $0.02

Chart Points: Downtrend resistance is at $10.65 on the weekly continuation chart. The Bollinger midline support is $10.16. These numbers still apply to May futures. Weekly stochastics are neutral. The 100-day moving average support on the July chart is $10.27 1/4. Overhead trendline resistance is the upper Bollinger Band at $10.69 3⁄4. Stochastics are neutral. The November contract has lateral resistance at $10.60 and a shallow downtrend at $10.57. We can argue a triple top, with the implication being that a move to $10.60 would continue toward $10.80. Regression channel support is $10.30.

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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. The old resistance is now support at $393.70.

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Wheat

Wheat futures settled with 11 to 13 cent losses in the nearby winter wheat contracts on Friday. MPLS was mostly 6 to 7 cents lower. Despite Friday’s losses Chicago was up 6.46% on the week and 13.87% higher over the past 2 weeks, with KC 4.59% higher this week and gaining 11% in 2 weeks. Specs in Chicago wheat futures and options reported their smallest net short position since last August on Tuesday at 28,702 contracts. March exports of US wheat dropped 14.4% from the same month last year at 2.12 MMT. Argentina’s 18/19 wheat crop is estimated at 20 MMT by the USDA Ag Attaché.

May 18 CBOT Wheat closed at $5.27 1/2, down 13 cents,

May 18 KCBT Wheat closed at $5.35 3/4, down 11 3/4 cents,

May 18 MGEX Wheat closed at $6.29 3/4, down 1 1/2 cents

KCBT HRW WHEAT Chart Points: Downtrend resistance on the weekly continuation chart is at $5.255. Bollinger midline support is $4.77 3/4. These apply to May futures. Stochastics are bullish for July futures. The upper Bollinger Band resistance is $5.68 1/2. We picked off stops above the March high @ $5.65 yesterday. Stochastics are overbought and looking for an excuse to sell off. The PZO got into overbought territory at 61 yesterday. Rising ADX says to pay more attention to MACD. The trend is your friend.

CBT SRW WHEAT Chart Points: The weekly continuation chart has lateral resistance at $5.06 1⁄2. Moving average support this week is $4.60 3/4 and applies to May futures. The thinly traded May daily chart rallied past the 2018 high at $5.185 and posted the highest price since August. July futures picked off stops above their March high. Lateral resistance is now $5.43 1⁄2, the 61.8% Fib retracement resistance. The Gann 1×4 line is at $5.29.

MGE Chart Points: The weekly chart shows a bounce from the 100-week moving average support at $5.80 and a gap above the 40-week moving average resistance at $6.205. That still applies to the vapor thin May contract. September futures bounced nicely from the 78.6% Fib retracement support @ $6.00 3/4. The 40-day average at $6.195 was broken to the upside. RSI is bull friendly. Stochastics are in overbought territory. The main overhead resistance line is a trendline at $6.46. See the September MGE chart snippet at left.


Cattle

Live cattle futures closed the Friday session with 15 to 60 cent losses in most contracts. Feeder cattle futures were down 12.5 to 40 cents on Friday. The CME feeder cattle index was down 21 cents on May 3 at $137.90. Wholesale boxed beef values were higher on Friday afternoon. Choice boxes were up 74 cents at $228.30, with Select boxes 32 cents higher at $209.49. Estimated weekly FI cattle slaughter through Saturday is at 647,000 head, a 14,000 head jump from last week and 32,000 larger than the same week in 2017. Cash trade was reported at $126 in the South, with a few reports of $128 and 200 in the North this week. US beef exports during March set a monthly record of 260.628 million pounds according to Census data. That was 15.4% larger than February and 11.4% above last year.

Jun 18 Cattle closed at $106.050, down $0.475,

Aug 18 Cattle closed at $105.075, down $0.450,

Oct 18 Cattle closed at $108.450, down $0.525,


May 18 Feeder Cattle closed at $140.400, down $0.400

Aug 18 Feeder Cattle closed at $146.325, down $0.250

Sep 18 Feeder Cattle closed at $146.775, down $0.275

Cattle Chart Points: Weekly chart support is now $103.82 with June the lead month. A back adjusted weekly continuation chart puts the 18-week moving average resistance at $109.87. The June daily chart is in a rising regression channel, with support near $104.15 and 50% retracement resistance at $107.92. Stochastics are in neutral. August futures spiked the 40-day moving average at $105.22. Stochastics and RSI are neutral, with ADX declining. Regression channel support is at $103.90. 

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FEEDER CATTLE Chart Points: The weekly chart shows a bounce from the 78.6% retracement and lower Bollinger Band. Resistance is $142.75 and $146.57, the 18 and 40-week moving averages respectively. Weekly chart RSI is neutral. The 100-day moving average resistance for the May chart is $143.35 and rejected Monday’s rally attempt. The lower Bollinger Band support is $137.00. Regression channel support for August futures is $143.72. RSI is neutral. The upper Bollinger Band resistance is $148.85.

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Lean Hogs

Lean hog futures finished the day mixed with most contracts steady to 20 on either side of UNCH. May was up 1.48% on the week. The CME Lean Hog Index was up 27 cents from the previous day to $62.93 on May 2. The USDA pork carcass cutout value was down 10 cents at $69.29 this afternoon. The national base hog weighted average price was 10 cents higher at $59.05. The USDA estimated weekly FI hog slaughter at 2.332 million head including Saturday. That is 31,000 fewer than last week but well above this week last year. Census data shows March pork exports from the US totaled an all time record for a single month at 538.108 million pounds. That was 2.7% above March 2017 and 9.6% larger than February.

May 18 Hogs closed at $67.075, unch,

Jun 18 Hogs closed at $73.525, up $0.025

Jul 18 Hogs closed at $75.575, down $0.100

Chart Points: The back adjusted and liquidity following weekly chart (067) shows support at $70.25. This applies to June futures. Weekly stochastics are neutral. June futures have 78.6% Fib retracement support @ $72.15. RSI and stochastics are oversold and trying to turn higher. The BB midline resistance would be $75.45 and held some sellers on Thursday. The 61.8% Fib retracement support for July futures is $75.55. Stochastics are trying to give us a buy signal but stuck in the oversold zone.

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Cotton

Cotton futures were triple digits higher on Friday, with July up 240 points on the day and 2.83% higher on the week. Mills reduced their May unfixed on call position by 2,873 contracts to just 24 contracts as of April 27. They still have a large July position. March US cotton exports rose 20.27% from the previous year to 506,933 MT according to US Census data. The Cotlook A index was up 25 points from the previous day on May 3 to 93.50 cents/lb.  The Adjusted World Price was updated to 74.99 cents/lb, 74 points above the previous week.

May 18 Cotton closed at 86.350, up 190 points,

Jul 18 Cotton closed at 86.900, up 240 points

Oct 18 Cotton closed at 82.850, up 155 points

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Source:

Brugler Marketing & Management, LLC

USDA

NOAA

CFTC

CME Group 

TradingHistory.com 

-R.W.N II

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