Yesterdays Close: March corn futures closed up 4 ¼ cents yesterday, trading in a range of 4 ¾.
Fundamentals: Export sales this morning came in at 599,000 metric tons, this compares with the expected range from 700,000-1,100,000 metric tons; last week’s number came in at 1,085,865 metric tons. Yesterday’s weekly EIA report showed ethanol production was down slightly from the previous week. There were an estimated 105.9 million bushels of corn used last week for ethanol, this is down from 106.7 in the previous week but above last year’s 104.1 for the same time. We will continue to keep an eye on weather developments in South America, this will likely be the key price catalyst as we round out the year.
Technicals: Yesterdays move higher against the contract lows was constructive but far from bullish. We see the probability of the market trading a nickel on either side of 350 until we get a fundamental catalyst to give us a new technical direction. The December futures contract was glued to 350 and we wouldn’t be surprised to see March follow suit for the near term. Technical resistance held yesterday at 354, that will remain intact. If the market takes that out we could see short covering up towards 360 ¼ which represents the 50-day moving average, an indicator that the market has struggled to get out above since July. On the support side, 348 ¾ is the first line in the sand.
Resistance: 354**, 360 ¼****, 367-369 ¼**, 373 ½-375****
Support: 348 ¾**, 334-335 ½***, 323-325 ¼**
Yesterdays Close: January soybeans finished yesterday’s session down ¼ of a cent, this after trading in a range of 7 ¼ on the day.
Fundamentals: Export inspections this morning came in at 943,000 metric tons, this compares with the expected range from 800,000-1,200,000 metric tons; last week’s export sales number came towards the low end at 869,086 metric tons. The USDA did announce a sale of 263,000 metric tons to China yesterday for the 2017/2018 marketing year. The bulls will want to see a trend of higher exports in order to get this market out above technical resistance. We will continue to monitor South American weather developments as they get into the crop developmental stages.
Technicals: The market finished near unchanged yesterday after trading in a decent range. The market is stuck between technical support and resistance. We continue to be patient for better value, we see that from 982-986 ¼. This pocket represents the 50 and 100-day moving average, as well as the 50% retracement from the June lows to the July highs. If we see a close below, we could see long liquidation from funds back towards the bottom end of the range which comes in at 968. Historically we see a rally this time of year, so we continue to play the market with a long bias despite being range bound for the last three months.
Resistance: 999-1004 ¾***, 1014**, 1021 ½****
Support: 982-986 ¼***, 968 ¼****, 957-963 ¼****
Yesterdays Close: March wheat futures closed up 6 cents yesterday after trading in a range of 6 ¼ cents.
Fundamentals: Export sales this morning came in at 184,000, this is not the number that the bulls wanted to see. Big global supplies and less than stellar demand has been keeping a lid on any significant rally. The bulls really want to see a fundamental shift and a trend of higher exports to help stabilize the market. A big sale here and there will not cut it, only a trend of higher demand will encourage shorts to begin covering a portion of their position.
Technicals: Wheat futures traded right up to resistance yesterday and has failed so far this morning to retain that strength, the bears will want to see follow through on the floor to confirm a failure; volume confirms price. If the market does indeed failed, we could see a run towards new contract lows below 424 ¼, we have first minor support at 428 but 422 ½ is the more significant level we have an eye on. A break and close below could lead to accelerated selling pressure, we would not be surprised to see the March contract make a run towards the $3 handle.
Resistance: 433 ¾-435**, 445-447****, 452 ¾**
Support: 428* 422 ½***, 412 ¾**, 399-402 ¾****
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.