Daily Comments

 

Grain and soy markets have kicked off this new week with positive trade but thus far remain contained within last week’s ranges.  Corn and, to a lesser extent, wheat have been the upside leaders as of late, but when you look at the overall progress the grains have made thus far, it is not exactly awe-inspiring.  Technical indicators are positive, but it would appear these markets are going to need some fresh, positive news soon, or chances are they will begin to stumble once again.

While there is no assurance it will be bullish, or bearish for that matter, we do have the October production and supply/demand reports on the calendar for this coming Thursday.  Here are trade estimates: Corn production is expected to come through at 15.121 billion bushels from a yield of 173.5.  Last month, the USDA had this pegged at 15.134 and 173.8. Carryout is expected to be 2.138 billion. For beans, the trade is looking for a production figure of 4.134 billion with a yield of 49.9.  In September, these were placed at 4.146 and 50.1.  Ending stocks are expected to total 233 million, compared to last month at 220.  Wheat ending stocks are expected to come through at 647 million, up from 615 million last month.  For the global ending stocks, corn is estimated to come through at 313.05 MMT, beans at 119.71 MMT, and wheat at 258.38 MMT.

According to the CFTC, during the week ending October 3rd, large speculators were buyers of corn, soy oil, and cotton and sellers everywhere else.  After purchasing nearly 6,200 contracts of corn, they are estimated to be net short 211,700 contracts.  In beans, they sold nearly 30,000 contracts and are now net short 20,400.  They sold 9,000 contracts of Chicago and KC wheat combined and are short 121,600 contracts between those two markets.  They remain long bean oil and meal but reduced the long position in meal by nearly half last week.     

 

Wheat

December wheat has begun the week with a positive step forward and once again is pushing against the 21-day moving average.  This market has tested this line numerous times during the past month but has never closed above it.  In fact, it has not closed above that line since the end of July.  If successful in doing so this time, the door would open for a poke up to 6.07, but with oscillators overbought and flashing a sell sign, I am not holding my breath.  Cycle counts ahead line up for the 12th, and the 23rd, with that last date marking the completion of the 1st cycle of 90-calendar days from the July high.

We have strength to kick off the trade for the week in KC futures as well, and December futures have nearly reached the 13-day moving average, again.  If bulls could push this market through the 6.89/6.93 level, we could see a quick poke up to 7.09, but with oscillators already overbought, I suspect it is going to be challenging to maintain the optimism.  Cycle counts come in between the 12th/16th, and then the 23rd/27th.

Corn

December corn was rejected from the 4.99/5.00 level on Friday, but undeterred, bulls have returned this morning to give it another crack.  This would be the third time in the past three sessions that we have flirted with that resistance, and if bulls are successful at pushing through this time, we should see prices extend up to the 38% retracement at 5.07 ½, which also happens to be the highest point this contract has traded since early August.  Oscillators suggest a sale could soon be at hand, but ideally, we will extend this rally into the next cycle counts between the 11th/12th.  After those dates, the following cycle counts are on the 23rd, and the 3rd of November.

March corn has not quite returned to resistance at 5.14, which it pressed against late last week, but bulls appear determined to head in that direction.  If they can violate that mark, the door swings open for a stab up to 5.21.  Cycle counts ahead line up for the 11th/12th, the 23rd,and the 3rd.

Soybeans

The bean market is not used to taking a back seat to the grains, at least not over the past few months, but that is precisely where it finds itself right now.  November futures are trading higher to begin the week, and we have oscillators trending higher, which should provide bulls with a little extra incentive.  That said, they really need to push and close above 12.82, and if successful, there would be potential for a quick shot up to 13.15, to an extreme of 13.33.  The next cycle counts line up between the 13th/18th.

January beans continue to chop between 13.00 and 12.80.  Oscillators are pointed higher so bulls should have a little wind at their backs for at least the next couple of sessions.  If they can push this contract through 13.02 on a close, the door opens for a stab to at least 13.32 and possibly 13.49.  The next cycle counts come together between the 13th/18th.

Soy Oil

Having held at the 55-cent level, which also happens to be a 50% retracement, it would appear that a few shorts have decided to cash in the chips this morning.  While the contract has not made a tremendous amount of headway, stochastics are on the cusp of turning higher, giving the impression that we may have pressured the market enough for the time being.  If correct, look for formidable resistance between 58 and 59 cents.  The next cycle count lines up for the 11th.

Soy Meal

December meal is trying to recover some of the losses incurred last Friday, but thus far, only partially.  It would appear this contract has settled into a trading range between 379 and 367. Oscillators are pointed higher, so bulls could have the upper hand for another day or so, but if they can push through the upper end of this range is questionable.  Even if successful, gains would likely be limited to the 385/387 level.  Cycle counts ahead are on the 13th, the 24th, and the 3rd/6th.

 

Cotton

Cotton bulls have come out swinging this morning and have punched December futures up to the highest point traded since the 29th of September.  We are currently pressing against resistance at 88.60, but oscillators have just turned higher so the path of least resistance should be to the upside.  The key for the bulls will be to see if they can violate the 90-cent mark on a close.  The next cycle count is on the 17th.

Lean Hogs

Solid follow-through high last Friday for December hogs, and we have quickly completed a 50% retracement of the entire swing lower since the September 20th high.  Both oscillators and stochastics are pointing higher, so the bulls should have the wind behind them.  Look for resistance at 74.60 and 76.40.  After today, the next cycle counts are on the 19th and the 30th.

 

Live Cattle

December cattle wrapped up last week on a positive note, and with oscillators now crossed higher, the path of least resistance should be to the upside for at least the next few days.  Look for resistance at 188.32, 189.20, and 190.46.  The performance of this next wave should answer whether this market has peaked or not.