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Corn rose modestly on bottom picking after last week’s crop report, but peaked on Monday as the bears returned. Bullish news is lacking as weather over the next couple of weeks should aid in the development of late planted corn and filling of ears. USDA currently projects the average yield at 167.4 bpa, although many in the trade look for it to rise near 170-174 bpa. Ag Watch’s yield projection is at 168.3 bpa. Last week, the crop rating fell one point to 72 percent in good-to-excellent condition. There are a few concerns about an early frost, but this is the norm at this time of the season. Export inspections were 38.2 MB with cumulative shipments running at 1.587 BB compared to USDA’s projection of 1.920 BB. After reducing their short position a couple of weeks ago, the trend following funds have added 30 MB increasing it to 80 MB.
December corn bottomed last week at 358 followed by a rebound to 381 on Monday where it peaked. The market fell to 365.5 Wednesday where modest support was found. Resistance is expected at 373-375, although there could be a test of 381 again, but probably no more than 388. As it stands now, the recovery from 358 will probably be complete by August 29th. Once it is done, the downtrend should resume with a sell-off to 343-337 or 321 with 302 being the extreme. Cycle analysis points to a bottom ending the decline from the April high at 517 occurring around September 8th-10th. However, it may be closer to September 30th when a seasonal low tends to occur. Next week, the odds are 90 percent that December corn will be lower.
Soybean futures have edged lower since last week as there is not a great deal of positive news. The ratings rose one point to 71 percent of the crop in good-to-excellent condition. With 83 percent of the crop setting pods compared to the average of 79 percent, and mostly favorable weather forecast the rest of the month, the bulls have little ammunition to support a rally. Export inspections were meager at 2.0 MB. with cumulative shipments at 1.587 BB. USDA’s target is 1.640 BB, but could come up short. In other developments, the trend following funds lightened the short position 50 MB last week reducing it to 245 MB. With expectations for a larger crop this fall, the bulls may have to wait until planting begins in South America before a major bottom develops.
November soybeans fell to 1035 on Thursday, which was slightly below last week’s low at 1038.75 Resistance is expected at 1055-1060 while a test of 1069 could occur. Unless there is a close beyond this level, setting a higher high, the trend is down with prices likely headed to 1017 or 985-970. One wave pattern points to a sell-off to 941-936. Cycle analysis leans to a bottom developing as soon as September 10th, but it will probably be closer to September 25th as a seasonal low does not usually develop until early October. Once prices bottom, the chances are that it will wrap up the sell-off beginning in May at 1279. Next week, the odds are 70 percent that November futures will be higher.
Wheat has shown some signs of life recently, but the bulls cannot seem to capitalize on it. This is mostly because of an expected increase in global stocks and competition in exports from the Black Sea region. Last week, inspections were 21.9 MB and above the average needed to reach USDA’s target of 925 MB. However, cumulative shipments are off to a slow start and running below the pace needed to achieve their projection. Spring wheat harvest has begun and 17 percent complete compared to the average of 33 percent. The trend following funds lightened their short position the past couple of weeks reducing it 25 MB last week to 385 MB.
After peaking earlier this month at 591, December wheat fell to 544.25 last week followed by a rebound to 571. The market has gone nowhere since and is residing in a narrow range. Right now, it is unclear as to whether the sell-off from the May high at 765 has ended. One wave pattern still shows the potential for falling below the contract low at 542.25 to 524 or, maybe, 512. In addition, if you will notice on the chart, a head and shoulders formation appears to be unfolding, which is bearish. At this moment, for greater confidence that the sell-off has ended, a close beyond 571 is needed. Next week, the odds are 70 percent that December wheat will be higher.
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Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned.