Morning Futures Roundup

    Fundamentals
There was something for both Bulls and Bears in this past Friday's USDA quarterly grain stocks report. For the Bulls, the USDA lowered its estimate of old-crop Corn in storage to 988 million bushels as of September 1st. This was a 12% decline from last year's levels and about 125 million bushels lower than the average pre-report estimate.

Wheat futures also received some bullish news as the USDA estimated Wheat inventories at 2.104 billion bushels or nearly 175 million bushels below analysts' estimates. Some traders believe that more Wheat was used for animal feed than previously anticipated, which would account for the lower than expected inventory levels, especially with U.S. Wheat exports facing stiff competition from the Black Sea region.

The report was not all bullish, as the USDA surprised many traders by estimating old-crop Soybean inventories at 169 million bushels, which was 37 million bushels above average analyst's estimates and above even the highest pre-report estimates by some traders. The increase in inventories was attributed to a revised upwards estimate to the size of the 2011 Soybean crop by 30 million bushels.

Though the Soybean estimate was viewed as bearish by some traders, the fast pace of U.S. Soybean exports so far and the belief that Brazil will not have any Soybeans available for export until the new-crop harvest begins in late February, will keep demand for U.S. Soybeans high even at current price levels.

   Technical Notes
Looking at the daily chart for March Soybeans, we notice prices attempting to put in a near-term bottom after prices fell over $2 per bushel in only 2-weeks time. There appears to be significant support between the 38.2% and 50% Fibonacci retracement levels which translates into a price range between 1480.00 and 1530.00 on the daily chart.

The 14-day RSI has plunged from overbought readings over 70 to as low as 35.50 in the past 4 weeks, but never went to an oversold reading despite the $2 plus decline in prices. The lows made on Friday at 1508.50 look to be near-tem support for March Beans, with resistance found at the 20-day moving average, currently near the 1631.50 price level.

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About Mike Zarembski

Born in the grain pits of the Mid-America Commodity Exchange (MidAm) in the early 1990s, Mike's futures career soon shifted to the offices of TD Waterhouse in 1999, followed by Xpresstrade in 2002 and eventually optionsXpress in 2007.