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Last Weeks Close: March corn futures finished up 5 cents last week, trading in a range of 6 cents. Funds were estimated to have been sellers of 24,485 contracts which puts their net short position at 223,405; this is just a stones throw from their record short position posted roughly a month ago.
Fundamentals: Weekly ethanol numbers have been an ongoing silver lining for the market recently, but it is far from what is needed to get this market headed further north. Export sales have been spotty at best. The bulls will want to see better than expected weekly export numbers consistently to build a price floor. Weather and crop development in South America continue to be a key talking point and will be until we get new news from the states, that may not come until the January USDA report. There are some forecasts suggesting that parts of Argentina could be drying up over the next week to week and a half which could help put a near term premium in the market.
Technicals: The market made new lows to start last week but managed to rally from there to finish the week on the highs. As with any rallies we have seen over the last few months, we are recommending tempering the expectations. We continue to see the opportunity to trade a nickel on either side of 350 until we get a new fundamental catalyst to give us that next directional move (other than sideways). We see first resistance coming in at 356 ¼, this represents the 50-day moving average. The 50-day moving average is a very basic indicator, but is one we have been talking about for the last six months as it is something the market has struggled to close above since July. If the bulls can achieve consecutive closes above, perhaps then we could see some short covering from the funds; but the first test represents a sell opportunity.
Resistance: 355-356 ½****, 369 ¼-370 ½***, 375****
Support: 345-348**, 334-335 ¼***, 323-325 ¼**
Last Weeks Close: March soybeans finished down 18 ¼ cents last week, this after trading in a range of 24 cents on the week. Funds were heavy sellers, selling 64,933 contracts which flipped them to a net short of 52,478 contracts.
Fundamentals: Exports have been one of the key points of focus for market participants as the news wires have been relatively quiet. Last weeks export sales numbers came in at the top end of expectations, but we continue to believe that the market will need to see consistency better than expected numbers in order to put an end to the bleed lower in prices. As with corn, we will be monitoring weather in South America as their crop starts progressing at a more rapid pace.
Technicals: The market has been in sell off mode for the last three weeks. Fridays option expiration helped offer some support to the market but that could change with those options off the board. The RSI is sill near that oversold level with a reading of 31 this morning. 950-956 ½ will be first support for this March contract, that was the spike low from September. A break and close below opens the door to additional pressure on the back of funds extending their net short position, the next line in the sand for support comes in at 937 ½. On the flip side, the bulls have a lot of work to do as the chart looks like a technical graveyard. 972 ½ is the first level of resistance they want to see a close above to at the very least encourage some consolidation.
Resistance: 972 ½-975 ½***, 984 ¾-989**, 999-1004**
Support: 950-956 ½***, 937 ½***, 922-929 ¼**, 915 ¼****
Last Weeks Close: March wheat futures managed to finish last weeks trade up 6 ½ cents, trading in a range of 13 cents. Fridays Commitment of Traders report showed that funds were buyers of 1,314 contracts, putting their net short position at 164,098.
Fundamentals: Wheat is no different than corn and beans in terms of the export situation. Wheat had great exports last week, but we need to see a string of better than expected numbers as opposed to a great one followed by three subpar reports. Low prices often cure low prices, but ample global supplies will continue to keep a lid on the market for the intermediate term.
Technicals: The market has been grinding higher over the past two weeks after marking new contract lows at 410 ½. We continue to view rallies like this as an opportunity to sell. We see major technical resistance at 437. This represents the 50-day moving average, as with corn this is a simple indicator but one the market has struggled to get out above on a closing basis since July. Consecutive closes above will encourage short covering but will likely set up for another opportunity to sell.
Resistance: 437 ½ ***, 443-445¾ ****, 452 ¾****
Support: 415-418**, 410 ½**, 399-402 ¾****
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