Grains Stall at Technical Resistance

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Grain markets failed to find any meaningful follow through in Wednesdays trade.  A healthy pause or a top?

Soybeans

Wednesday’s Recap

March Soybean futures settled at a one week high of 1002’6 Wednesday, higher by 2’4. Overall volume came in at a one month high of 398,857, with March seeing a heavy 133,242 done. Total open interest dropped 4,496, or 0.49%, to end the session with 910,277 outstanding. The March maturity gained 5.60% (4,496) to finish at 325,256.

Technicals 

March soybeans continue to look constructive with closing prices working higher.  All in all this market remains mostly rangebound as participants wait for a breakout or break down.  We’ve been optimistic on beans since the bottom end of the range and feel like the upside here could be more favorable.  Overall sentiment seems to remain very bleak as recycled headlines (old news) continues to make the rounds, ie: Great weather in South America, Tarriff Talk, etc.  Those headlines have been swirling around and looming over the market for months at this point, so we tend to see the opportunity in a reversion to those.  A hiccup in weather, optimism on trade, etc.  Not that those need to happen, but it seems like there’s a discounted risk premium on either of those if not both.  

Technical Levels of Importance

• Resistance: 1002 1/2-1006 1/2***, 1011 1/2-1013 3/4**, 1018-1024 3/4****
• Pivot: 986 1/4-987 1/4
• Support: 977 1/4-980 3/4*** 973 1/2**

Popular Options

Option trading centered around the Jan 1000 calls with 4,712 changing hands and the Jan 990 puts with volume of 3,341. Option open interest is highest for the March 1100 calls at 18,115, and the March 980 puts at 29,308.

Volatility Update

Soybean implied volatility finished the session slightly higher as SVL rose by 0.12 to close the day at 15.84. Down by 0.47% to a one month low, historical volatility (as measured by the 30-day) ended at 13.81%. The SVL Skew settled slightly down, dropping by 0.15 to finish the session at -0.18, a one week low.

Seasonal Tendencies Update

(Updated on 12.9.24)

Below is a look at historical price averages for January soybean futures on a 5, 10, 15, 20, and 30 year time frames (Past performance is not necessarily indicative of future results).  As with corn, December has been a historically friendlier month for soybeans.  Keep in mind though that we’ve seen a lot of counter seasonal trends for beans throughout the year. 

Commitment of Traders Update

(Updated on 12.9.24)

Friday’s  Commitment of Traders report showed funds were net buyers of roughly 9.2k futures/options contracts, shrinking their net short position to -72,217 contracts. 

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