May God Help Market Bulls if USDA is Correct

Ken Lake
Aug 11, 2017
2 min read

When giving market recommendations based on the technical analysis it is accurate only when coupled with good analysis of the underlying fundamentals. Yesterday’s USDA Supply and Demand report changed the fundamental underlyers of the Ag market. Market analysts have argued all summer that deterroring crop conditions, as reported by USDA, do not support projected yield, also reported by USDA. At the end of the day, the market has been overwhelmed by the unwavering USDA yield number and substantial on-hand stocks of all grains. We will not have the opportunity to see relief from yesterday’s report until the combines roll and can confirm the actual yield. (note: God help market bulls if USDA is correct)

In the meanwhile, customers following our advice have good sales on the books and we will take the stance of avoiding additional sales. Analysts will now argue that USDA yield numbers are wrong (but their crop conditions reports are right) and the market will likely regain some of yesterday’s losses which will be met with anxious producer selling.

September corn has downside risk to the contract low of 349. Short term support is yesterday’s low of 356. Resistance is 367.

December corn has downside risk to 359. Support is yesterday’s low of 370. Resistance is 382.

November soybeans have downside risk to 907. If we close below 907 then the contract lows of 870 come into play. Today’s session actually traded below yesterday’s close but is currently trading higher than yesterday’s close. Support is today’s low of 946. Resistance is 959.

Wheat is poised to test contracts lows at around 430. If we penetrate 430 then 365 is the next support value on the weekly charts. US Stocks to use ratio has narrowed abit but is still a hefty 43%. World stocks to use ratio is a burdensome 29%. Producers holding 2017 production sell on any short term recovery. Producers considering planting wheat this fall should consider that the market’s job is to keep you away from that drill one more year.