Glacier FarmMedia | MarketsFarm – Soybean, corn and wheat futures in the United States are all trading near contract lows, with a lack of any significant weather threats likely to keep the bias pointed lower until something changes the narrative.
“There’s no story here to drive (futures) significantly higher… we need a story,” said Sean Lusk of Walsh Trading in Chicago.
“If we turn hot and dry for the rest of the month that would bend this thing back up, but there’s nobody calling for that,” said Lusk. He added that even if it does turn dry, at this point of the growing season soybeans are already setting pods and corn is past the pollination stage.
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Eventually speculators will look to take profits and cover their short positions, but Lusk noted that every previous attempt at correcting higher was met with renewed selling had he expected a sustained rally was unlikely in the absence of fresh weather concerns.
“We’ve done a lot of damage technically over the last six weeks or so,” said Lusk, adding “as of right now, the market is struggling to hold support… there’s nothing here that tells me to cover my short or go long.”
In the absence of a weather scare, a ‘black swan event’ such as heightened geopolitical tensions somewhere in the world could provide the catalyst for a move higher. Lusk said any bullish surprises in the U.S. Department of Agriculture monthly supply/demand report, out on Aug. 12, could also influence the markets.
From a chart standpoint, Lusk placed the next support level in November soybeans at US$9.92 per bushel, with the next downside target at US$9.72-75 per bushel. On the other side, the market would have to get back over US$10.68 to signal an end to the downtrend. For corn, he said there was no meaningful support until US$3.92-93 per bushel in the December contract, with resistance at US$4.1675 and again at US$4.24.
