MarketEdge AM Comments

May 10, 2023

(Phil Knuth)

Good Morning.  Corn and soybean futures were lower overnight.  July corn finished the overnight session off 2 ¼ cents, settling at 5.8250.  July soybeans were off 3 ¾ cents, settling at 14.1050.  In the outside markets, as of 7:40am:  The US Dollar Index is up one point, trading at 101.606.  June crude oil is off 40 cents, trading at $73.31 per barrel.  Precious metals are mixed.  Industrial metals are lower, except aluminum.  The Electronic Mini-DJIA is off 4 points, trading at 33,633.  Corn and soybean futures remain stuck in a downward trend this morning.  There is really no reason, with what we know today, for futures to be behaving any differently.  Planting progress reported on Monday afternoon confirmed that US corn and soybean planting is running well ahead of five-year averages.  Piling onto that, the current forecast for the US Midwest for the rest of the month of May should allow planting to wrap up in a timely fashion.  There is some concern about rains in the Dakotas slowing planting progress, however, in the 6-15 day timeframe there should be an opportunity for Mr. Dakota Farmer to make a significant dent in planting.  Along with weather/planting progress weighing on futures, the US continues to struggle with export demand.  China, once again, cancelled a significant amount of US corn purchases yesterday.  They are now up to around 1MMT of US corn cancellations in the last three weeks!  Finally, traders are positioning themselves and preparing for what is expected to be a bearish report on Friday.  On Friday morning, USDA will release the May WASDE Report.  Traders expect old crop carryout projections for both corn and soybeans to increase slightly and expect a big new crop corn carryout projection north of 2 billion bushels.  As with any report, nobody knows for certain what the government has up their sleeve until the report is released, however, with what traders know today, their odds are on a bearish report.  Yesterday, the funds sold 8000 contracts of corn, sold 5000 contracts of soybeans, and sold 4000 contracts of wheat.  They are now estimated to be net short 110,785 contracts of corn, net long 54,990 contracts of soybeans, and net short 120,855 contracts of wheat.  From a chart perspective, July corn finds initial support at the overnight low, 5.79, followed by the 15-month low charted one week ago, 5.6925.  Initial resistance is at 5.87, the overnight high, followed by 5.95, yesterday’s high, and then the psychological 6.00 mark, which was also Monday’s high.  July soybeans find initial support at the overnight low, 14.0250, followed closely by the psychological 14.00 level, and then the one-month low charted one week ago, 13.9225.  Initial resistance is at 14.1825, the overnight high, followed by yesterday’s high, 14.3250, and then the two-week high charted on Monday, 14.4675.  Opening calls are lower.
Have a great Wednesday.

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