The Grain Train Keeps Chugging Along!

Corn Technicals (July)

July corn futures made a strong move higher to start the week, which has bled into strength in the overnight and early morning trade, taking prices to new highs for the month.  This coincides with our pivot pocket that we outlined in yesterday morning's commentary, 470 3/4-472 3/4.  If the Bulls can clear this hurdle, technical momentum alone could take us to 484-487 1/2.  As mentioned in yesterday's Grain Express and in our interview with RFD-TV, we feel the Bulls have the technical advantage until we see consecutive closes back below significant support, 460-461 3/4.

Not to sound like a broken record, but we remain upbeat on new crop December corn futures as we've been in the camp that it could exceed expectations (in terms of upward price movement).  Whether the catalyst be inflation concerns, higher for longer energy prices, wheat prices surging, fertilizer concerns, or a weather/production issue, there seems to be several potential catalysts that on their own could help rally prices, not to mention the possibility of several of them coming into play.  We've been working with clients using futures and new crop short dated options.  Don't hesitate to reach out to our trade desk to discuss strategy or trade levels for December futures. 

• Resistance:  484-487 1/2****, 500**
• Pivot: 470 3/4-472 3/4
• Support:  460-461 3/4****, 454-455 3/4***

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Below is a snapshot of CME Group's volatility index for corn.  As you can see, we are near the lower end of it looking back over the last 10 years.  To us, this illustrates a lack of uncertainty and boarder line complacency.   That doesn't mean the market has to rally, but in our opinion it has and continues to represented a good risk/reward setup (for several reasons mentioned above).  There's never a reason for a big rally until after the fact.

Soybean Technicals (July)

July soybeans were able to chew through the 20 and 50 day moving averages yesterday, which helped define our pivot pocket, 1179 3/4-1182 3/4.  That helped propel prices to our 3-star resistance pocket, 1194 1/2-1195, which happened to be right at yesterday's high.  The next resistance pocket from here is within arms reach and is more significant, technically and psychologically.  That comes in from 1199-1201 1/4.  We have not traded north of here since the limit down day on March 16th, which seems like yesterday, but at the same time a year ago.  A breakout above here and technical momentum could feed on itself.  The next upside objective would be 1215 1/4-1220.

• Resistance: 1199-1201 1/4****, 1215 1/4-1220**
• Pivot: 1194 1/2-1195
• Support: 1179 3/4-1182 3/4**, 1168-1171****, 1156 3/4***

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Similar to corn, CME Volatility index for soybeans remains pretty subdued.  As we've mentioned a few times over the last several writeups/videos, we like looking at the options market as a way to play for a breakout of the range.  Long options has been a losing proposition for the better part of the last month and a half, but it'll have it's day again and we feel it could be sooner rather than later. 

Wheat Technicals (July)

Chicago wheat futures have decided to play ball, with prices surging higher overnight, knocking on the door of the March 9th high, 649 3/4.  Despite the nearly 70 cent rally over the last two and a half weeks, the RSI is only at 65, still below "overbought" territory.  As mentioned many times over that time frame, the Funds covering a 4-year old short position over the last two months should have raised some caution flags for those looking to remain bearish.  There will be an opportunity to play that side of it, but stepping in front of it here seems premature.  

July KC futures are making new highs this morning.  Yesterday's crop progress report showed good/excellent conditions unchanged at 30%. 

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