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What today's USDA report means for the markets


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Blue Line Grain Express

Email Oliver@BlueLineFutures.com or AgHedging@BlueLineFutures.com

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CORN (December)

Yesterdays Close: December corn futures finished yesterdays session unchanged, spending the day in a 3 cent range. Funds were estimated buyers of 2,000 contracts.

Fundamentals: Today is the day that many market participants have been waiting for. Will todays USDA report be the catalyst to give the market new direction? We are trying to temper our expectations but are hopeful like most everyone else that we will start to see more activity. The average estimates for the corn yield are at 172.3 bushels per acre. The average estimate for harvested acres comes in at 83.1. The average estimate for production comes in at 14.323 billion bushels. These are compiled in a convenience table below. Yesterdays weekly ethanol report showed production was up 1,000 barrels per day to 1,057. This mornings export sales came in at 2,364,500 mt which was a strong read with Mexico being the top buyer.

Technicals: Todays USDA report could be the catalyst to give the market a break out or a break down. The market has been in a sideways range for the past two months which has sucked volatility out of the market making call/put options compelling here from the speculative and hedge side of things. First technical resistance comes in at 351 , but 355 will be the more significant level for the bulls to close above. If they can achieve this, we could start to see funds cover their near record short (for this time of year). On the flipside, last weeks lows at 345 is the first support level, this held by a hair yesterday which keeps higher lows in play. Although we are neutral, we are the report to the long side for clients who want to be more aggressive with positioning.

Bias: Neutral

Resistance: 351 **, 355***, 360-362***, 372-375**

Support: 342 -345 **, 334-335 ***

SOYBEANS (January)

Yesterdays Close: January soybeans closed a pair of pennies higher yesterday, trading in a range of 4 . Funds were estimated to have been buyers of 2,500 contracts on the day.

Fundamentals: Today is the day where we get updated world supply and demand numbers from the USDA. The average analyst estimate for US soybean yields is 49.2, harvested acres at 89.4, and production at 4.404. We have been talking about attention turning towards South America post report, so we will want to monitor their production numbers too. Argentine soybean production is expected to fall 3.mmt to 56.7mmt. The Brazilian soybean production is expected to increase .3mmt to 107.3 mmt. We have a convenience table below for your convenience. Export sales this morning came in at 1,160,600mt, this was on the low end of high expectations with China being the top buyer.

Technicals: The chart has been very constructive over the past two months with prices continuing their trend of higher highs and higher lows. Top end of our technical resistance pocket comes in at 1004 , if the bulls can achieve a close above it will open the door to an extension towards 1021 . If we receive a bearish report, we could see prices trade back towards trendline support which has worked its way higher to 991. A break below trendline support will not change the bias as we see significant support all the way down to 979 . So how do you trade such a wide range of technical support? Break your orders up and scale in.

Bias: Bullish

Resistance: 999 -1004 **, 1014**, 1021 ****

Support: 991**, 979 -980 ***, 968 ****, 957-963 ****

WHEAT (December)

Yesterdays Close: December wheat futures closed cent lower yesterday, trading in a 8 cent range. Funds were estimated to have been buyers of 500 contracts on the session.

Fundamentals: We have a USDA report out this morning which will likely confirm ample supplies. US wheat carryout is estimated at .956 with a range of .940-.987. We will also want to be watching price action in corn and beans as it could spill over into the wheat trade. Export sales this morning came in at 781,800mt which was above expectations and the highest read weve seen in a while. This goes back to what we talked about the other morning with regards to low prices curing low prices. Wheat bulls will want to see this become a trend not just a one off.

Technicals: Technicals remain bearish, but wheat bulls and bottom pickers can point to a recent sideways trade and nice reversal yesterday as signs that a bottom may be in the process. Yesterdays lows of 419 will be important to hold going forward. First technical resistance comes in at 431 today, a break above would mark higher highs on the back of higher lows which would be a start to changing the tide. 438 remains the significant level we are watching, this represents the 50-day moving average, an indicator we have not closed above since July.

Bias: Bearish

Resistance: 431 **, 438 *** 443***, 462 **, 478-479****

Support: 419**, 415 **, 399-402 ****, 390-392 **

Range of Estimates

Average Estimate

Actual

Corn Production

14.127-14.459

14.323

Corn Yield

170-174

172.3

Corn Acres Harvested

83.1-83.5

83.1

Soybean Production

4.340-4.467

4.404

Soybean Yield

48.5-49.9

49.2

Soybean Acres Harvested

88.5-89.5

89.4

US Carryout

Range of estimates

Average Estimate

Actual

Corn

2.212-2.431

2.36

Soybeans

.340-.461

.42

Wheat

.930-.987

.956


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About the author


Oliver Sloup is Vice President of Blue Line Futures, a leading futures and commodities brokerage firm located at the Chicago Board of Trade. Blue Line Futures mission is to put the customer first, and that means bringing YOU the best customer service, consistent and reliable research and state of the art technology.  Oliver has been a guest on CNBC and Bloomberg, among others.  Oliver has over a decade of trading experience. Prior to Blue Line Futures, Oliver worked as the Director of Managed Futures at iiTRADER.

 

 

Contributing author since 10/6/17 

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