Charts of the Day – September 18, 2020

Chicago Wheat

Afternoon Market Commentary – September 18, 2020

by: Chris Betz

Corn Soybean Wheat
Old Crop (futures month, change, settle price) CZ0 3’2 378’4 SX0 15’0 1043’4 WZ0 18’6 575’0
New Crop (futures month, change, settle price) CZ1 3’6 393’2 SX1 4’6 976’2 WN1 15’4 582’6

Another up day to close out the week for all three with corn closing up 3 ¼, beans up 15, and Chicago wheat up 18 ¾ on spot contracts. Beans led the way for corn on continued follow through fund buying. Chinese purchases continue to lend support with the 11th consecutive export sale coming across the wire Friday morning. September U.S. soybean export sales now total 1.27 billion bushels, which represents just under 60% of the USDA’s projection for total exports in the 2020/2021 marketing year. South American weather is also inspiring bulls as moisture levels there are not conducive to planting.

Wheat went higher with spillover support from corn and beans, but fundamentally as well from dryness concerns abroad, as well as domestically in the western plains, for winter wheat crops.

December corn broke above prior resistance at the 50% retracement of the contract low to high, which opens up a test of the 384-386’6 level. Support is back at the 200 day making a bullish cross with the 20 day at 360’6. The December 21 corn is also garnering some attention, as it looks set to make a run at the psychological 400 level with resistance at 397’4.

November beans made a bullish close above the fib extension of the prior 2020 high to low retracement. Key resistance on the continuous chart is the 1071-1080 level. November 21 beans demonstrate the big inversion in deferred month contracts in beans with Friday’s high 63 cents below that of the Nov 20 contract. Big inversions, such as this, are meant to be sold.

December Chicago wheat leapt to a fresh seven month high, but ran into some resistance around 580. Upside resistance is the high at 599’4. Key support is back at the 200 day at 543. The July 21 contract leapt above the prior high at 579, opening up a possible move to test the highs on the continuous chart at 587 and 593. Target 610 above there.

Technical Thoughts – September 17, 2020

By: Ken Lake

Don’t get caught in the impending collapse!

Making recommendations when the market is going up every day makes my work pretty easy!  Nevertheless, one day this rally will be over, don’t get caught having to sell on the impending break.

Continued Chinese interest in corn and soybeans along with speculator buying keeps futures values moving higher but creates extremely over-bought conditions begging for a break in price.  I sense that we will see a major break before the November election, perhaps by mid-October.  Regardless of when it comes, we may look back six months from now and realize that contract highs for the year are behind us.

November soybeans posted a new contract high today as I write this at 1032.  That exceeds my previous target of 1028.  The next target is 1071, the high we made back in March of 2018.  The lack of futures market carry and the fact that counter-seasonally we should make highs at harvest time, farmers should avoid storing soybeans and sell everything off the combine.  There is little, other than pure speculation, telling you to hold soybeans.

December corn topped our upside target of 376 today.  The next number on my chart is 411, the old contract high.  I see no fundamental reason for corn futures to trade there.  Today’s value seems like a gift considering that even after subtracting 500,000 acres from harvested acres and reducing the US yield 4 bushels per acre (from the August report) we will still have more than 2.5 billion bushels for a projected Sep 2021 carryover.  I am anticipating a collapse in corn futures values as harvest progresses.  With a nearly 15 billion bushel crop coming at us and a 2.5 billion bushel carryover, futures spreads must widen or basis levels must collapse to pay someone to store this crop.  I fear some pain is at hand for producers owning corn beyond October 31st.

December wheat has recovered after its two-week blowout and has found support at the 200-day moving average of 542.  Momentum indicators are oversold.  Hold off on sales for now.  Advance sales at 569, 599.  July 2021 wheat has found support at 545, target 579 to advance sales,