Bearish Fundamental News Drives Down Corn, Soybean, and Wheat Futures

Strategic Insights -

Tuesday's US Department of Agriculture crop production report was met with significant bearish sentiment in the futures markets, with traders calling it "extremely bearish" for Chicago Board of Trade corn and soybean futures, and wheat futures expected to be pulled lower in sympathy. The report's implications have led to an examination of longer-term technical support levels in these futures markets, with prices likely to test psychological and key technical support levels.

Key Takeaways:

  • CBOT corn futures are expected to blow past the $2.00 per bushel psychological support level and potentially reach sub-$2.00 territory, with longer-term technical support at $1.91 1/2 (May 2002 low), $1.84 (June 2001 low), and $1.74 (August 2000 low).
  • CBOT soybeans are likely to break below technical support at $5.19, with major psychological support at $5.00 per bushel, and longer-term technical support at $4.75, $4.65, $4.50, $4.15 1/2 (January 2002 low), and $4.01 1/2 (July 1999 low).
  • CBOT wheat futures have technical support at $2.99 (contract low) and $3.00 (trendline support), with longer-term chart support at $2.73 (May 2003 low), $2.55 1/2 (April 2002 low), and $2.42 1/2 (June 2001 low).
  • KCBT wheat futures have solid technical support at $3.24 1/4 (contract low), with longer-term technical support at $3.12 (August low), $2.94 1/2 (July 2003 low), $2.71 1/4 (April 2002 low), and $2.48 1/2 (December 1999 low).
  • For the bulls to gain traction in corn, soybeans, and wheat, prices must surpass significant resistance levels: $2.20 (CBOT corn), $5.60 (CBOT soybeans), $3.50 (CBOT wheat), and $3.85 (KCBT wheat).

Statistics:

  • CBOT corn futures are expected to fall below the psychological support level of $2.00.
  • CBOT soybeans are expected to break below technical support at $5.19, with a potential target of $5.00 per bushel.
  • CBOT wheat futures have technical support at $2.99, with a potential break below $3.00 causing longer-term technical damage.
  • KCBT wheat futures have solid technical support at $3.24 1/4, with longer-term technical support at $3.12, $2.94 1/2, $2.71 1/4, and $2.48 1/2.

Sources:

  • US Department of Agriculture crop production report (no date provided)
  • COMTEX (http://www.comtexnews.com)
  • Jim Wyckoff on the Markets (e-mail address: jim@jimwyckoff.com)