Markets unPACKed: Technichals as of May 21
Technicals as of May 21, 2021
For this week’s column, I thought I’d recap some notes and recent levels we discussed internally as a team in soybeans, corn, wheat, and sugar.
As with the rest of the grain complex, soybeans saw a decent selloff Wednesday, May 12 through Sunday night, May 16.
Beans held the previous week’s lows and then on Monday, May 17 tried to push lower with decent volume selling off to remain in a range from 1550-1640 for some time. On Wednesday, May 19, across-the-board grains attempted to rally but failed as expected and have made new lows in the overnight vs. Tuesday’s day session lows. Many of the risks on trades such as copper, lumber, equities, and crypto are seeing additional weakness, leading us to believe we could be entering a period of consolidation in the grain complex. If the market gets going to the downside there could be a trade toward $15. Rallies should be capped at $16 or $16.20.
By the end of Wednesday, we saw a nice selloff in beans as the intraday 50-cent break brought the total break from the previous Wednesday’s $16.66 high, to about $1.40, which pretty much matched the break we saw during mid-January. The break on heavy volume on the April 30 grain report should serve as a decent buy zone. The bottom of that range was $14.95-ish.
As of this writing, Friday, May 21, we are watching the market trade lower with corn without much excitement to levels or further price action. We are well above the $14.95 level and looking for the next level of support.
From our technical analysis: Following a 31-cent selloff Friday, May 14, on Monday, May 17 we watched for another selloff as an indication this market could lag lower until July futures find their next level of support between 622-630. July corn was the only market in the grain complex making a new low Sunday night versus the previous week’s low. As we approached “turnaround Tuesday” this week, we were looking for a positive day. It is pretty remarkable that our new level of support to look for was a dollar off the contract highs we just saw on Friday, May 7, at 735.
By Wednesday, May 19, corn was the lone contract in the grain complex and well off the lows of the week. With this strength, we were hoping to see a bounce back to $7.00 but such strength did not prevail. July corn went the way of the rest in the commodity space and was down sharply early in the day but managed to claw back to a marginally positive close. Of note, this market has already traded to the launch point of the rally on the bullish grain report of April 30. We looked for a new low in the immediate future with the objective of a rally to $6.85 and possibly $7.15.
As of this writing, July corn is down 5 cents at 662. If Chinese purchases continue and this dry forecast prevails, this could be a good opportunity to buy some out-of-the-money calls back up by 700.
Chicago wheat was the weakest of the grain complex on Wednesday as we were still trading above the recent trading range, which the market broke away from on April 21. The bottom of the rally point from April 21 is 660 and the normal variation week objective is 661. If this level held a rally towards 725 it would be the first objective followed by 753.
By Friday, May 21, this rally has not happened, as wheat traded 18 cents lower at 675.
By Thursday, May 20, sugar was pretty dead so far this week, which is surprising in the face of what’s going on in all the other markets. If sugar got to 16 cents, we saw this as a next support level and then possibly a rally toward 1750-1775. As of Friday, July sugar continues to trade in a tight range with similar levels as yesterday to watch for.
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