Tag: grain trading

E-mini S&P (March)

Yesterday’s close: Settled at 2835.25

Fundamentals: The S&P gained nearly 1% to kickoff the week. We reiterated on Friday and early yesterday while the S&P was still in the red that shorts better watch out. With strong earnings and undeniable momentum, the government shutdown ultimately brought a fear of missing out. What if the shutdown was fixed over the weekend while the market was close? It wasn’t, so the market worked higher through the session on Monday in anticipation of the stopgap deal that was reached late yesterday. The deal will keep the government running through February 8th before it presents another ‘political hurdle’. Equity markets across Asia are all up 1% while the German DAX is up about .5%. Overnight, the Bank of Japan left policy unchanged but was upbeat on inflation signaling they expect to see their 2% target sometime next year. The ECB is up next and this morning we saw strong ZEW Economic Sentiment data out of the region. After trading to a new all-time high overnight of 2842, the S&P is seeing pressure following a 7.9 magnitude earthquake in the Gulf of Alaska that has sparked tsunami warnings down the west coast of Canada and U.S.

Technicals: Previous resistance is support, 2828 is the first level we are eyeing this morning upon the pullback due to the earthquake/tsunami. We are now bringing major three-star support up to 2805.25-2807, this is a level in which we would like to buy into on the week if it presents itself. Support comes in front of it at 2814.25-2815. Our upside target of 2847.75 was not achieved with the overnight high of 2842. As we stated above, momentum is undeniable, only a close below 2805.25-2807 right now would put us on the sidelines.

Bias: Bullish

Resistance – 2842*, 2847.75***, 2869.75**

Support – 2828**, 2814.25-2815**, 2805.25-2807**, 2794.25-2797**, 2786.50**, 2769-2771.75***

 

Crude Oil (March)

Yesterday’s close: Settled at 63.57

Fundamentals: Prices elevated into the close yesterday as traders expect data this week to show a drawdown in U.S inventories for the tenth week in a row. API is due out after the bell today. The U.S Dollar has not done bears any favors; it remains at the lowest level since 2014, boosting commodity prices. However, this will be important to watch this week as the European Central Bank has a policy meeting Thursday and traders get ready for the Federal Reserve next week.

Technicals: Price action has extended above firs resistance which we adjusted to 63.80 though it settled below here yesterday; this will be crucial to watch today as traders position for inventory data. First resistance comes in today at 64.05-64.23; a close above here will encourage further buying. The big takeaway for us yesterday was another test to major three-star support and another hold. Until we see a close below this level, the bulls remain in the driver’s seat.

Bias: Bearish/Neutral

Resistance – 64.05-64.28**, 64.83-64.89**, 66.87***, 68.43**

Pivot – 63.80

Support – 62.78-63.00***, 62.43**, 61.87**, 59.96-60.45***

 

Gold (February)

Yesterday’s close: Settled at 1331.9

Fundamentals: Gold has done absolutely nothing wrong on a fundamental or technical basis for more than a month. A trader cannot fight this. That is why our Bias has remained unequivocally Bullish. However, we do believe that the Dollar is attempting to find some support at a level that can be seen in the Dollar Index at 90. The government will remain open until at least February 8th and dovishness on the Fed’s message has already mounted. As a bull, it is prudent to make sure you capitalize in one way or another with the ECB due out Thursday and the Fed next week sandwiched between key data points. The Bank of Japan left their policy unchanged last night, however, the Yen has firmed up since its low at midnight as the bank’s Outlook Report envisions inflation reaching their 2% target next year. This has been supportive for Gold. Richmond Manufacturing data is due at 9:00 am CT today and Chicago Fed President Evans, the second Fed dissenter speaks at 5:30 pm CT.

Technicals: Gold remains technically strong and pullbacks are extremely shallow. However, this does not change the fact that there is strong overhead resistance from 1350 all the way up to 1365. Support at 1326.6-1328 remains sticky and this is great for buyers. Traders should exude caution through the next week and a half. A close above 1365 will spark the next bull leg.

Bias: Bullish/Neutral

Resistance – 1340.9*, 1345**, 1350***, 1358-1365***

Pivot – 1334.9-1335.8

Support – 1326.6-1328**, 1321.6**, 1307.1-1308.9**, 1302-1303.4***

 

Natural Gas (February)

Yesterday’s close: Settled at 3.224

Fundamentals: We will continue to focus more on the February contract as we eye options expiration this week. February pushed through recent highs overnight, trading to the highest level since September 28th. We referenced here yesterday that if you are selling this market, you want to be doing so in the March. The March contract remains much more contained due to cash expectations and demand for the product now, not upon delivery at the end of February. March has not broken out above recent swing highs and in fact remains more than a quarter of a dollar from its September 28th highs. Drawdown expectations for this week’s read are near what would have been a record level before earlier this month. However, drawdowns going forward are much more subdued.

Technicals: Price action has gotten out above major three-star resistance in February which aligns with the 200-day moving average and recent highs. The next level above here is 3.43 and we believe this should keep prices contained. Over roughly the last month, strong starts to the week have dissipated through midweek, we believe this should be the case into tomorrow. However, we are concerned with the firm move out above recent highs and remain Neutral. As we stated above, traders looking to sell should do so in the March contract. In fact, we could make a case for introducing a slight Bearish Bias for the March.

Bias: Neutral

Resistance –3.43-3.446***, 3.568**

Pivot – 3.258-3.288***

Support – 3.185-3.199**, 3.115-3.134**, 3.039** 2.971-2.989***

 

10-year (March)

Yesterday’s close: Settled at 122’03

Fundamentals: We believe that there is a buy the rumor, sell the fact event into and through the three central bank meetings this week and next. Expectations for a more hawkish BoJ and ECB were put in place earlier this month. Though we expect to see a step in the more hawkish direction this year from these central banks, we do not believe they are ready quite yet. Because of this along with the technicals, we believe there to be a buying opportunity in the 10-year. Prices have firmed through the overnight and after the BoJ left policy unchanged. Although their Outlook Report expects to see 2% inflation next year, leaving policy unchanged for now has begun to bring relief in treasury prices. We expect to see more of the same from the ECB Thursday. Chicago Fed President Evans, the second dissenter, speaks today at 5:30 pm CT.

Technicals: As stated above, we like positioning long the 10-year. According to our data, there was a record net-short position in the 10-year two weeks ago. The RSI is signaling oversold and after two of the biggest names in the bond market put out bearish calls, the selling has been exacerbated. Resistance does come in at 122’09-122’125, so you may not want to chase this morning’s bounce and instead buy a slight pull back.

Bias: Bullish

Resistance – 122’09-122’125**, 122’245-122’29***, 123’10-123’135**, 123’215**, 123’27-123’28**

Support – 122’015**, 121’25**, 119’20-120****

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

 

Disclaimer:

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.

CORN (March)

Yesterdays Close: March corn futures finished yesterday’s session down ½ of a cent, trading in a range of 3 ¼ cents. Funds were estimated sellers of 5,000 contracts.

Fundamentals: Recent weather in Argentina has prompted concerns over yield loss, if realized this could be a catalyst to achieve a technical breakout and encourage short covering. We have February option expiration on Friday and 350 looks to be the magnet. As of this morning there are roughly 33,000 open calls between 350 and 355. On the put side, there are roughly 27,000 open between 350 and 345. Strikes with high open interest tend to be a manet into expiration. We had mentioned in yesterday’s report that export inspections would not be released due to the government shutdown, we were then told otherwise shortly after our release, so we apologize for that. Export inspections came in at 668,944 metric tons, this compares to the expected range from 800,000-1,000,000 metric tons; last weeks was 584,389 metric tons.

Technicals: Yesterday morning corn prices were lingering at the top end of the range again, an area where expectations need to be tempered. I would love nothing more than to see corn rally, but you have to trade the market you have, not the one you want. The market rejected the top end of the range and that brings us right back down towards the 350 level which continues to be a magnet. We continue to believe there is an opportunity to trade a few pennies on either side until we get that technical breakout or breakdown.

Bias: Bearish

Resistance: 354-355**, 358-360 ½****, 366 ½-369 ¼****

Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**

 

SOYBEANS (March)

Yesterdays Close: March soybeans gaped higher on the open, finishing the session up 8 ¼ cents, trading in a range of 7 ¼. Funds were estimated buyers of 7,000 contracts.

Fundamentals: Hot and dry weather in key growing areas in Argentina sparked the gap higher yesterday and the market managed to hold ground on the back of those concerns. If we start to see moisture work into the forecast, you can expect that premium to come out of the market. Export inspections yesterday morning came in at 1,419,430 metric tons, this was above the top end of the expected range from 1,000,000-1,400,000 metric tons. Last week’s number came in at 1,231,037 metric tons. February option expiration is this Friday, it is possible that this could keep a lid on another leg higher but there’s nothing significant to report in terms of significant open interest at a specific strike (like corn).

Technicals: The market has managed to close higher for 6 of the last 6 sessions and it appears we could see number 7 today. Despite the march higher, the RSI (relative strength index) is only at 60. Technical resistance has been tested yesterday and is again being tested in the early morning session. We have defined resistance as 986 ½-987. This pocket represents the 100-day moving average and the 50% retracement (middle of the range) from the June lows to July highs. If we fail to see an extension we would not be surprised to see the market come back to support wit the first line in the sand coming in at 979 ¼, but the more significant level is 971 ¾. If you’ve been wrong for the past week and a half this is where you should consider reducing. We still think there is more upside potential but a consolidation lower would be healthy. There is seasonal buy around the corner, we will keep you posted on that when we get closer.

Bias: Neutral

Resistance: 986 ½-987***, 999-1004**

Support: 979 ¼**, 971 ¾ ***, 961 ¼-963 ¼**, 950-952 ¼***

 

WHEAT (March)

Yesterdays Close: March wheat futures gaped higher yesterday and finished up 4 cents, trading in a range of 4 ¼ cents on the day. Funds were estimated buyers of 2,000 contracts.

Fundamentals: Export inspections yesterday morning came in at 337,980 metric tons, this was within the expected range from 250,000-400,000 metric tons; last weeks was 368.651 metric tons. We know that funds have established a solid net short position, but we do not see any fundamental catalyst at this point that would spook them out just yet. Demand continues to be lackluster which will likely keep a lid on any significant rally. February option expiration is on Friday, there is nothing that sticks out in terms of strikes with significant open interest.

Technicals: The market looks like it is rounding out after trying to recover all of the loses from the most recent USDA report. First technical resistance today comes in at 429 ½, if the market can achieve a conviction close above this level, perhaps we see some short covering from funds push prices towards 443. A failure to breakout will likely lead to a test of the contract lows at 410 ½.

Bias: Bearish

Resistance: 429 ½-430**, 437**, 443-448 ¼ ****

Support: 410 ½-413 ¼***, 399-402 ¾****

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

Disclaimer:

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.

 

CORN (March)

Yesterdays Close: March corn futures finished yesterday’s session up 3 ¾ cents, trading in a range of 5 on the day. Funds were estimated buyers of 17,000 contracts.

Fundamentals: Yesterdays move higher is mostly attributed to short covering funds as there was not much new news across the wires. Weather in South America continues to be watched closely as some weather models conflict each other. Outside of South American weather and crop development, we will continue to keep an eye on the trend of exports. The market needs to start seeing a trend of better than expected numbers to encourage additional short covering and invite new buying into the market. Due to the Martin Luther King holiday on Monday, the weekly exports data has been pushed back to tomorrow at 7:30am cst.

Technicals: The market is officially trading above the 50-day moving average for the first time in over a month. Though that is encouraging for bulls, we will be watching this on a closing basis as we have not seen a conviction close above this indicator since July. If we see a close above, the next resistance pocket comes in at 358 ¼-359 ¼. This pocket represents the 100-day moving average along with a key Fibonacci retracement level. The bears are still in control as we have made lower lows and lower highs over the past several months. If we fail to “breakout” we will likely see prices retreat towards the bottom end of the range which we have defined as 345-346 ½.

Bias: Bearish

Resistance: 358 ¼ -359 ¼***, 367-369 ¼****

Pivot: 352 ¼

Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**

 

SOYBEANS (March)

Yesterdays Close: March soybeans finished up 2 ½ cents yesterday, trading in a range of 8 cents on the session. Funds were estimated buyers of 2,000 contracts.

Fundamentals: With the USDA report now behind us, market participants will turn their attention back to South American weather and crop development along with weekly export data. There is not much new news to report on the weather front this morning. Due to the shortened trading week, export sales data has been pushed back to tomorrow morning at 7:30am cst. Also on trader’s radar is the soybean complex including soybean meal and soybean oil as both have shown strength recently.

Tehcnicals: March soybean futures filled the gap yesterday that was down at 962 ¾ which was followed up by buying. Bulls need to see a close above 971 ¾ soon to encourage additional short covering and new buying in the market. A close above resistance opens the door to an extension towards 984 ½-986 ½. This pocket contains several technical indicators including the 50 and 100 day moving average, along with the 50% retracement from the June lows to the July highs.

A failure to breakout will lead to pressure on prices, likely down to the bottom end of the range near 950 as technical traders exit longs because they are not getting what they want from the market. We continue to be friendly towards the market but need to see the market work higher into the weekend.

Bias: Bullish

Resistance: 971 ¾ ***, 979**, 984 ½-986 ½***, 999-1004**

Support: 950-952 ¼***, 937 ½***, 922 ¼****

 

WHEAT (March)

Yesterdays Close: March wheat futures finished yesterday’s session up 5 ¼ cents, trading in a range of 7 ¾ on the day. Funds were estimated buyers of 4,500 contracts.

Fundamentals: Wheat futures worked higher yesterday on the back of what was likely short covering on concerns of cold and dry weather in some key growing areas. It will likely still be a few weeks before we see the true effects of the recent weather on the crop. Export sales that are normally released this morning are pushed back to tomorrow due to the shortened trading week; they will be released at the normal time 7:30am cst.

Technicals: The bulls have been putting up a decent fight over the last month, but the bears remain in control until we see a conviction close above technical resistance. The first line in the sand comes in at 425 ¼. A close above opens the door to a potential run at the recent highs of 437. A failure to see closes above these resistance levels will likely lead to new contract lows below 410 ½.

Bias: Bearish

Resistance: 425 ¼**, 437***, 443-448 ¼ ***

Support: 410 ½**, 399-402 ¾****

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

Disclaimer:

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.

E-mini S&P (March)

Yesterday’s close: Settled at 2803.75

Fundamentals: There is no new all-time high overnight, let’s say that U.S equity markets are settling in after yesterday’s rip your face off rally. We have not wavered from our Bullish Bias this week or anytime in the recent past. Even when we exuded caution here Tuesday morning we discussed pullbacks and support levels as buying opportunities. Congress is expected to vote and pass a stopgap budget deal today, a failure to do so could bring some pressures so traders must keep an ear to the ground. Though major indices in the U.S are peeling back and ‘settling in’, the DAX is playing catch up gaining .5%. The US Dollar gained some footing late yesterday on technicals and an upbeat Beige Book along with Dallas Fed President Kaplan. The stronger Dollar brought a weaker Euro, and we have discussed here how a weaker Euro can lift European equities. Also helping is firm GDP, Fixed Asset Investment and Industrial Production data from China. We say firm because they all beat by about .1%; what a surprise. A lot of talk this morning calling these numbers fixed. We believe that the US Dollar is going to attempt to stage a consolidation higher and though we do not expect a sharp pullback in the S&P, it should keep price action in check at, around and just above yesterday’s high and our major three-star resistance at 2807. This morning we have Building Permits, Housing Starts, weekly Jobless Claims and Philly Fed at 7:30 am CT. The ECB’s Coeure speaks at 8:30 am CT.

Technicals: A new all-time high of 2809.50 is ‘settling in’ after failing to secure a close out above major three-star resistance yesterday. The market is Bullish and ultimately only a close below major three-star support at 2769-2771.75 will give us a reason to go short. Price action might not be ready to extend higher yet today, but it is likely that we see this before the weekend. The next level above here is 2828 and a close above major three-star resistance today will push the tape directionally. The Russell lagged in retracing yesterday and faces stiff resistance at 1595.8; a move out above here could get things going all around. Major three-star support remains at 1560-1564.4 and a close below here will encourage waves of selling.

Bias: Bullish

Resistance – 2807-2809.50***, 2828**, 2847.75***

Support – 2800*, 2794.25**, 2788.75-2789.25**, 2783.50-2784.50**, 2769-2771.75***

 

Crude Oil (March)

Yesterday’s close: Settled at 63.92

Fundamentals: Yesterday’s February option expiration worked to contain price action. This morning OPEC said in their Monthly Report that production increased 42,000 bpd in December per a secondary source. They revised non-OPEC supply higher due to the U.S and Canada. They reiterated that compliance was strong. They also forecasted a small uptick in demand growth for 2018. Crude had a muted initial reaction. API inventories showed a draw of 5.12 mb, this would be the ninth weekly draw in a row if confirmed by EIA today. They also reported a build of 1.782 mb in Gasoline and 609k build in Distillates. The numbers as a whole were on the bullish side with Crude drawing more and Gas building less. Today’s EIA read expects -3.536 mb Crude, +3.426 mb Gasoline and +.086 mb Distillates. Crude inventories have been drawn down by at least 4.5 mb each week for the last six weeks and this has been a tremendous catalyst in keeping prices bid. Crude production will be a key on this read as it dropped 290,000 bpd in last week’s due to the winter storm. The question today is how much production comes back online? Traders also want to keep an eye out for headlines with Nigeria as rebels have threatened attacks.

Technicals: Price action has been fairly quiet as traders await today’s EIA read. First resistance comes in at 64.23-64.28, a move out above here could attract more buyers. As price action consolidates traders should remember that Friday’s have been very supportive for Crude. Furthermore, only a close below the weekly trend line and major three-star support at 63.00-63.25 signal a potential correction, until then the bulls have a clear upper hand.

Bias: Neutral/Bearish

Resistance – 64.23-64.28**, 64.83-64.89**, 66.87***, 68.43**

Support – 63.00-63.25***, 62.43**, 61.87**, 59.96-60.45***

 

Gold (February)

Yesterday’s close: Settled at 1339.2 before selling off late in the session

Fundamentals: The Dollar stabilized late yesterday on technicals, an upbeat Beige Book and Dallas Fed President Kaplan. The Dollar Index double bottomed on the session and quickly paired losses ahead of the electronic close which sent Gold to a session low of 1326.6 and about 1% from its settlement. Price action has held ground very well into this morning and we have a big board of data at 7:30 am CT to digest; Building Permits, Housing Starts, weekly Jobless Claims and Philly Fed. As we said yesterday, we are unequivocally bullish Gold in the long-term, however, price action is due for a consolidation lower at minimum. This is what we are seeing and the technicals will be key.

Technicals: Price action breached first key support amidst strong selling but is attempting to bottom out into this morning. Ultimately, a minor correction or consolidation lower will be extremely healthy for the metal. Resistance on the session comes in at 1332.2-1334.7, near the key closing level of 1335.8, a long-term level that the bulls want to maintain a close above in order to keep the immediate-term upper hand. A close below 1327.3-1330.5 will keep selling pressures. These levels are tight, but each is important in their own respect to immediate term momentum.

Bias: Bullish/Neutral

Resistance – 1332.2-1334.7**, 1335.8**, 1340.9*, 1345**, 1358-1365***

Pivot – 1327.3-1330.5**,

Support – 1321.6**, 1307.1-1308.9**, 1302-1303.4***

 

Natural Gas (February)

Yesterday’s close: Settled at 3.232

Fundamentals: Cash Natural Gas is down more than a $1 today from over $5. Today’s storage expectations range from -196 to -199. The month of January is already drawing significantly from storage and next week’s expectations continue to mount near previous record highs. Considering this, look for price action to respond on a bigger draw than expected. For now, the technicals have kept the tape in check.

Technicals: Price action has battled against the 3.18-3.21 level while facing the 200-day moving average just above at 3.257. Today this 3.18-3.21 level will consolidate to 3.199, a close below here will neutralize the tape. Yesterday’s session high was 3.288 before settling back in, resistance is tiring the tape but can only do so for so long. A bullish read today and close above the 200 dma will give the bulls fire power to 3.43.

Bias: Neutral

Resistance – 3.258-3.288***, 3.43***

Pivot – 3.199

Support – 3.115-3.134**, 3.039** 2.971-2.989***

 

10-year (March)

Yesterday’s close: Settled at 122’21

Fundamentals: Treasury prices were under pressure for much of the session as equity markets bounced back strongly from Tuesday’s weakness. However, the real selling through major support came in the second half of the day on an upbeat Beige Book and a hawkish Dallas Fed President Kaplan who is concerned about overheating the market and feels strongly about three hikes this year, eluding to a potential fourth. A big slate of data at 7:30 am CT includes Building Permits, Housing Starts, weekly Jobless Claims and Philly Fed. The technicals will keep pressure on this market but misses in data will neutralize the tape.

Technicals: Price action closed below major four-star support yesterday at 122’245-122’29 and this has kept pressure on the tape. However, we do see support against the lows of the session at 122’125. A consolidation back into 122’245 will help neutralize the weakness, but right now the sellers have an edge. We believe there will be a buy opportunity at some point in the near future, but this may not be until after the Fed meeting in two weeks.

Bias: Neutral

Resistance – 123’10-123’135**, 123’215**, 123’27-123’28**, 124’01*, 124’06-124’07

Pivot – 122’245-122’29****

Support – 122’125**, 121’25**, 119’20-120****

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

Disclaimer:

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.

CORN (March)

Last Weeks Close: March corn futures finished Fridays trade just 1 ½ cents lower, trading in a range of 4 ½ cents on the day. Funds were estimated sellers of 13,000 contracts (larger volume due to USDA report). For the week March corn futures finished the week down 4 cents, trading in a range of 6 cents. Fridays Commitment of Trader’s report showed funds have a net short position of 222,516 futures and options. Keep in mind that the CoT data is compiled, and funds have likely exceeded their previous record short of 230,556 futures and options.

Fundamentals: Last week’s USDA report had a bearish tilt to it but managed to stabilize relatively well. Quarterly stocks came in at 12.516 billion bushels and ending stocks at 2.437 billion bushels, both of which were above the average estimate. Yield and total production was also increased. The market has found stable ground in the Monday night/Tuesday morning trade as weekend rains were disappointing in parts of Brazil and Argentina.

Technicals: March corn futures made new lows following the release of Fridays USDA report but managed to close above technical support which we have outlined as 345-346 ½ for some time now. Some of that momentum has carried over into the early trade here Tuesday morning. Though we have been range bound for the better part of the last 5 months, the bears have the edge as lower highs and lower lows have been the trend. If we see a break and close below 345, we would expect to see a continuation towards 334-335 ¼. The only silver lining for the bulls is that the funds could spark a rally from short covering. If you’ve been banking on this for a while you’ve been disappointed. The funds previous record short position was reduced by 70k contracts and the market only rallied roughly 4 cents off of contract lows. If funds start reducing, it doesn’t mean the flip. The trend is your friend, and right now that is sideways. We continue to feel that there is opportunity 2-5 cents on either side of 350 until we get a breakout or breakdown; not the most exciting trade but you have to take advantage of the market you have not the one you want. First technical resistance comes in at 353, this represents the 50-day moving average. A very simple indicator but one we have not closed above since July.

Bias: Neutral

Resistance: 353-355***, 359 ¼-359 ½***, 367-369 ¼****

Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**

 

SOYBEANS (March)

Last Weeks Close: March soybean futures finished Fridays session up 13 ½ cents, trading in a range of 18 ¼ cents; funds were estimated buyers of 11,000 contracts on the session. For the week, March soybean futures finished the week down 7 ¼ cents, trading in a range of 27 cents. Fridays Commitment of Traders report showed that funds have a net short position of 92,835 futures and options, this is their 5th largest short position on record and the most since June when we bottomed. Keep in mind that the CoT data is compiled through Tuesday.

Fundamentals: Last week’s USDA report was moderately friendly with quarterly stocks coming in at 3.157 billion bushels, this vs the average analyst estimate of 3.181 billion bushels. Ending stocks came in at 470 million bushels, this vs the average analyst estimates of 472 million bushels. Production and yields were also lowered slightly. Some of the strength in the overnight and early morning trade is coming from follow through USDA buying along with disappointing weather in South America over the long weekend. Drier conditions persist in areas of Argentina and Brazil. If rain makes its way back into the forecast, expect that premium to come out of the market.

Technicals: The chart has been ugly, there’s no way to sugar coat that, but we have continued to suggest there is value at these levels. We know that funds have a rather large net short position, it often seems funds don’t hold that large of a short position in beans as opposed to corn and wheat. We recommended using cheap call options last week and to start looking at futures from 950-952 ¼. Fridays report could be the spark that gets the market going in the right direction. If we see a close back above 971 ¼, we expect to see additional momentum press prices towards our next resistance pocket from 986-986 ½. This very narrow pocket contains the 50 and 100 day moving average, along with the 50% Fibonacci retracement (middle of the range) from the June lows to the July highs. If the market fails to hold Fridays rally in the first half of the week, we expect to see 937. So often market participants only plan for an exit if the market goes their way, you must also prepare an exit for if they don’t.

Bias: Bullish

Resistance: 971 ¾**, 979**, 986-988 ¼***, 999-1004**

Support: 950-952 ¼***, 937 ½***, 922 ¼****

 

WHEAT (March)

Last Weeks Close: March wheat futures closed 13 ¼ cents lower on Friday, trading in a range of 17 ¼ cents. Funds were estimated to have been sellers of 10,500 contracts on the day. Expanded ranges and increased volumes were on the back of the USDA report. For the week, wheat finished down 10 ½ cents, trading in a range of 17 ¼ cents. Fridays Commitment of Traders report showed funds short 129,000 contracts, this was an increase of 1,000 contracts; keep in mind that this data is compiled through Tuesday and is likely much larger now.

Fundamentals: Wheat futures took a hit on Friday and are continuing their slide in the early morning trade as Fridays USDA report confirms the continued bearish bias from traders. Quarterly stocks came in at 1.874 billion bushels, above the average analyst estimate of 1.849 billion bushels. Ending stocks came in at .989 billion bushels, above the average analyst estimate of .959 billion bushels. Winter wheat seedlings came in at 32.608 million acres, vs estimates of 31.107 million acres. Ample global supplies and dismal demand continues to be the story that is keeping a lid on any significant rally.

Technicals: Wheat futures failed to get above our first resistance pocket this week from 434-437 ½. The bearish report opened the door to our three star support that comes in from 416 ½-420 ¾. A close below here opens the door to contract lows at 410 ½ and a possible test to the $3 handle. If the bulls are able to hold support, perhaps we consolidate; but this is a market we have been very adamant about selling on rallies. We continue to believe that is the case until we get a new fundamental catalyst to change the technical backdrop.

Bias:Bearish

Resistance: 425 ¼**, 435-437 ½**, 443-448 ¼ ***

Support: 416 ½-420 ¾***, 410 ½**, 399-402 ¾**** 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

Disclaimer:

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.

CORN (March)

Yesterdays Close: March corn futures closed up 1 ¼ cent, trading in a range of 2 ¾ cents on the session. Funds were estimated to have been buyers of 4,500 contracts.

Fundamentals: Trade estimates are starting to circulate which is ramping up the anticipation of Fridays USDA report, arguably the biggest report of the year. The headline number will be yields, but the valuable nuggets will be in the ending stocks data. Corn yield estimates are ranging from 173.7-176.4 with the average estimate at 175.2. Trade estimates for US quarterly stocks are ranging from 12.23-12.68 billion bushels with the average estimate at 12.41 billion bushels. US ending stocks estimates are ranging from 2.26-2.52 billion bushels with the average estimate at 2.44 billion bushels. We will get updates from CONAB tomorrow on South American production.

Technicals: The market continues to hug the 350 level which continues to be a magnet for front month futures. Although it has been a trader’s paradise trading the tight range over the past several months, many market participants are looking for a new direction (other than sideways). If you are in that camp, volatility is cheap, meaning options should be on your shopping list. If we get a friendly report and a technical close above resistance, we could see continued short covering from the funds. The 50-day moving average is the first line in the sand at 353 ½, above that the market has room to run towards 359 ¼-359 ½. On the support side, a close below 345-346 ½ opens the door to 334-335 ¼.

Bias: Neutral

Resistance: 353 ½ -355 ¼***,359 ¼-359 ½***, 367-369 ¼****

Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**

 

SOYBEANS (March)

Yesterdays Close: March soybean futures finished down 3 ¾ cents, trading in a range of 7 ½ cents on the day. Funds were estimated to have been sellers of 3,000 contracts.

Fundamentals: Market participants continue to gear up for Fridays USDA report which is arguably one of if not the biggest report of the year. Yield numbers will be the headline number, but ending and quarterly stocks will be the more significant numbers. Quarterly stocks estimates range from 2.96-3.31 billion bushels with the average coming in at 3.19 billion bushels. US Ending stocks estimated range is from .425-.595 billion bushels with the average of .445 billion bushels. Weather in South America will continue to be monitored. Rains are coming in and going out of forecasts on a continued basis, this has led to a bit of a choppy trade here to start the week.

Technicals: The market has been chopping around between 960 and 970 give or take for the last week and a half, likely shaking out a lot of week shorts and longs as we head into Fridays USDA report. 971 ¾ continues to be the first line in the sand the bulls want to close above. If they can achieve this, we will likely see funds start to cover their short position and press prices back towards 986-988 ¼. This pocket contains a handful of indicators including the 50 and 100 day moving average, along with the 50% retracement or the middle of the range from the June lows to the July highs. On the support side, there isn’t a while lot until 950-952 ¼, this would be the most ideal spot to look long futures. If you wanted long exposure ahead of the report without worrying about swings in futures, consider looking in the options market.

Bias: Neutral

Resistance: 971 ¾**, 977-979 ¼**, 986-988 ¼***, 999-1004**

Support: 950-952 ¼***, 937 ½***, 922 ¼****

 

WHEAT (March)

Yesterdays Close: March wheat futures finished up 4 ¾ cents yesterday, trading in a range of 8 ½ cents. Funds were estimated buyers of 4,000 contracts.

Fundamentals: The market has been working higher on some colder temperatures and drier weather are coming back into the forecast over the weekend. On top of that, we also have an important USDA report on Friday that is likely prompting some short covering. US quarterly stocks estimates range from 1.80 billion bushels to 1.91 billion bushels with the average at 1.85 billion bushels. US ending stocks are estimated to come in from .855 billion bushels to .987 billion bushels with the average estimate at .96 billion bushels.

Technicals: March wheat futures are testing the 50-day moving average again in the early morning trade. The fact that the market has not rejected prices again from this level could lead to some short covering. If the bulls can achieve a conviction close above, we could see funds cover shorts and press prices towards 443-448 ¼. Baring any significant change in fundamentals, we think this would set up for an excellent opportunity to sell. Bears wan to defend 435-437 ½ on a closing basis to prevent short covering.

Bias: Bearish

Resistance: 435-437 ½ ***, 443-448 ¼ ***, 459-461 ¼**

Support: 416 ½-420 ¾**, 410 ½**, 399-402 ¾****

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

 

Disclaimer:

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.

CORN (March)

Last Weeks Close: Corn futures finished the first week of the year up ¼ of a cent, trading in a range of 4 ½ cents. Fridays Commitment of Traders report showed funds reduced their net short position by 8,957 contracts, putting their net short at 189,536 futures.

Fundamentals: This week’s focus will be on Fridays USDA report which has the potential to give us new direction. We will continue to compile estimates and have those for you in the coming days. Weather and crop development in South America continues to be a big catalyst for the market. Corn used for ethanol production has been a nice silver lining for the market, but the strong trend took a step back last week. Corn use for ethanol dropped from 112.4 million bushels down to 106.5mb. Weekly exports were also dismal last week with a read of 101,200 metric tons, this compares to the expected range from 600,000-900,000 metric tons and the previous weeks read of 1,245,500 metric tons.

Technicals: On the technical side of things, the market has been in a narrow range for several months. We have been in the camp of playing a nickel on either side of 350 until we get a new fundamental catalyst to give us a breakout or breakdown. First technical resistance for Mondays trade will come in at 354 ½. Until we see consecutive closes above, bullish expectations should be tempered. If the market can achieve a conviction close above, we could see short covering from funds to 359 ¼-360 ½. This pocket represents a key Fibonacci retracement, the December 4th highs, and the 100-day moving average.

Bias: Neutral/Bearish

Resistance: 354 ¼-355 ¼***, 360-361 ¾***, 375****

Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**

 

SOYBEANS (March)

Last Weeks Close: March soybean futures finished the week up 7 ¼ cents, trading in a range of 18 ¼ cents. Fridays Commitment of Traders report showed funds extended their net short position to -87,834, an increase of 16,457 futures from the previous week.

Fundamentals: Soymeal and oil helped offer support to soybeans last week, but this week’s focus will be on the USDA report which will be released on Friday at 11 am cst. We will continue to compile estimates and have those for you in the coming days. Weather and crop development in South America will also continue to be a key catalyst; there is not much new news on that front to report this morning. Weekly export sales last week came in at 554,000 metric tons, this was a hair below the low end of expectations.

Technicals: The market has managed to stabilize well following a dramatic uninterrupted 68 cent meltdown in December. Significant resistance comes in from 985 ½-990. This pocket represents the 50 and 100 day moving average, as well as the 50% retracement from the June lows to July highs. If the market can achieve consecutive closes above this pocket, we expect to see short covering from the funds get us back above the $10 handle.

Bias: Neutral

Resistance: 985 ¼-986 ½***, 999-1004**

Pivot: 971 ¾

Support: 950-952 ¼***, 937 ½***, 922 ¼****

 

WHEAT (March)

Last Weeks Close: March wheat futures finished last week up 7 cents, trading in a range of 9 ½ cents. Fridays Commitment of Traders report showed that funds reduced their net short by 16,537 which puts their net short at 135,523.

Fundamentals: Colder and dryer temperatures have offered support to the market, but seasonal weakness continues to reign supreme. If you had sold March wheat on January 3rd and bought in back on the 16th, you would have been profitable for 12 of the last 15 years with the average gain being roughly 17 cents. Fridays USDA report will be the highlight of the week, we would not be surprised to see some position squaring ahead of that.

Technicals: We have been referencing the 50-day moving average for months now as key resistance. The market is lingering right around it as we were not able to see a convincing trade above it yet. If we start to see consecutive closes above, we could see short covering towards 447 ¼. We are tempering the expectations and siding with the seasonal trend and looking at the sell side at these levels. First support comes in from 416 ½-420 ¾. If you were able to sell against resistance last week, this is the area you want to look at reducing.

Bias: Bearish

Resistance: 435-437 ½ ***, 443-448 ¼ ***, 459-461 ¼**

Support: 416 ½-420 ¾**, 410 ½**, 399-402 ¾****

 

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

Disclaimer:

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.

  1. Fed Speak

Members of the Federal Reserve spoke late last week for the first time since the December 13th rate hike. We are looking forward to hearing much more from them this week, especially their opinion on growth now that tax-reform is passed. In their dovish hike in December they refrained from factoring in the tax legislation. The verbiage we hear this week will be key for a Dollar that has started the year off on its back foot and has lost more than 2% since the December Fed meeting. San Francisco Fed President Williams said this morning that the Fed should hike three times this year and expects growth to accelerate due to tax-reform. He also predicts the unemployment rate will grind to 3.7% this year without a large jump in inflation. Fed members Bostic, Williams and Rosengren speak tomorrow afternoon. Minnesota Fed President Kashkari, a rate hike dissenter, speaks Tuesday while his companion in dissenting, Chicago Fed President Evans speaks Wednesday. St. Louis Fed President Bullard who spoke last Thursday also speaks on Wednesday. Outgoing NY Fed President Dudley speaks on Thursday.

 

  1. Inflation data

To add fuel to the interpretation of Fed speak are fresh reads on PPI Thursday and the more closely watched CPI on Friday. As we all know, lagging inflation has been the key argument in only gradually tightening policy. In her last statements in December, outgoing Fed Chair Janet Yellen expressed concern on whether recent rate hikes stopped inflation in its tracks. Also on Friday is Retail Sales which has been trending strongly in recent months. As we know, inflation worries are not only domestic and are a major concern around the world. We remain long term bearish the Dollar and believe that we can see it close out the first quarter by losing somewhere in the ball park of 4%. However, between these reads and the Fed speak, an oversold Dollar with a 14-day RSI near 30 has struggled to follow through on the downside this last week. It would be prudent to take something off the table if you have been playing either the Dollar short or the Euro long and look for an opportunity to reposition at a better spot on volatility this week.

  1. China data

Data out of China this week includes CPI and PPI on Tuesday night and reads on Trade Balance Thursday night. These will be critical for several markets that have performed extremely well to start the year. Crude Oil is at the highest level since May 2015. Palladium traded to a new all-time high of 1101.70 and took out the January 2001 level at 1090, it is currently up 92% since the start of 2017. The Aussie has gained about 5% in a month but faces our major three-star resistance overhead at .7870-.7884. All three of these are likely to continue higher in the long-term, however, choppy reads on China data should open the door for a nice swing trade lower this week. Also, be aware that Australia has some of its own data this week; Building Approvals on Monday night, Business Confidence Tuesday and Retail Sales Wednesday.

  1. Earnings season underway

The S&P and NQ both set record high closes on Friday and the momentum is extremely strong. With the NQ taking the lead, we are targeting 6707 this week. Earnings season gets underway and JP Morgan and Wells Fargo report on Friday. The banking sector put in a very strong 4th quarter gaining nearly 10% (XLF) but some have expressed concern over tax-reform legislation slowing earnings in the near-term. Also, we have been putting a lot of emphasis on the small caps lagging. The Russell 2000 still has not taken out its December 4th all-time high. It finished Friday’s session just shy of that 1564.4 mark, it must close out above here this week to confirm this move in equities. 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

Disclaimer:

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.

BrokersEDGE Grain recap 1-5-18

CORN (March)

March corn futures finished the first week of the year up ¼ of a cent, trading in a range of 4 ½ cents over the four sessions. Fridays Commitment of Traders report showed that funds bought back 8,957 contracts, reducing their net short position to 189,536. This was the second consecutive week that funds reduced; three is a trend. The focus this week will be on Fridays USDA report, we will be compiling estimates and making those available by midweek. On the technical side of things, the market has been in a narrow range for several months. We have been in the camp of playing a nickel on either side o f 350 until we get a new fundamental catalyst to give us a breakout or breakdown. First technical resistance for Mondays trade will come in at 354 ½. Until we see consecutive closes above, bullish expectations should be tempered. If the market can achieve a conviction close above, we could see short covering from funds to 359 ¼-360 ½. This pocket represents a key Fibonacci retracement, the December 4th highs, and the 100-day moving average.

SOYBEANS (March)

March soybeans finished last week’s session up 7 ¼ cents, trading in a range of 18 ¼. Fridays Commitment of Traders report showed funds sold 16,457 futures, extending their net short position to 87,834 futures. This is the most bearish they have been sine June/July (where we bottomed). As with the other grain markets, the focus this week will be on Fridays USDA report which will be released at 11am cst. We will continue to compile estimates and have those for you by midweek. Technically speaking, the market has stabilize well following a dramatic uninterrupted 68 cent meltdown in December. Significant resistance comes in from 985 ½-990. This pocket represents the 50 and 100 day moving average, as well as the 50% retracement from the June lows to July highs. If the market can achieve consecutive closes above this pocket, we expect to see short covering from the funds get us back above the $10 handle.

WHEAT (March)

March wheat futures finished last week’s trade up 7 cents, trading in a range of 9 ½. Fridays Commitment of Traders report showed funds bought back 16,537 futures, reducing their net short to 135,523 contracts. Cold and dry weather have helped support prices, but it will still be a while longer before we see the true effects of that. Seasonally, this is a weak time of the year for wheat futures; we sent out a 15-year seasonal statistic in last week’s report referencing that. We have been referencing the 50-day moving average for months now as key resistance. The market is lingering right around it as we were not able to see a convincing trade above it yet. If we start to see consecutive closes above, we could see short covering towards 447 ¼. We are tempering the expectations and siding with the seasonal trend and looking at the sell side at these levels.

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

Disclaimer:

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.

CORN (March)

Yesterdays Close: March corn futures closed down 2 cents, trading in a range of 3 ¼ cents on the day. Funds were estimated sellers of 5,000 contracts on the session.

Fundamentals: Export sales this morning came in at a dismal 101,200 metric tons, this compares with the expected range form 600,000-900,000 metric tons and last week’s 1,245,500 metric tons. Yesterday’s weekly EIA inventory data showed that ethanol production was down from 1.090 million barrels a day to 1.032 million barrels per day. Ethanol has been a silver lining for the corn market, the overall trend has been stronger so this week’s read is more of an outlier, if weakness becomes a new trend then we will have some issues. Market participants are continuing to watch weather and developments in South America, there is nothing new to report on that front this morning. Next week’s USDA report is arguably the most important fundamental catalyst on the horizon as we will get a good deal of updates. We will start compiling estimates and have them in next week’s reports.

Technicals: We saw a lot of folks get excited about corn earlier in the week while we were waving the caution flag suggesting you trade the market you have not the one you want. The market failed at the 50-day moving average which will continue to be first resistance, we have not seen a conviction close above this technical since July; this comes in at 354 ½ today. We continue to believe a nickel on either side of 350 represents opportunity, until we get a fundamental catalyst to give us a breakout or a breakdown. Volatility has been extremely light which gives a tremendous opportunity in the options market.

Bias: Neutral/Bearish

Resistance: 354 ¼-355 ¼***, 360-361 ¾***, 375****

Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**

 

SOYBEANS (March)

Yesterdays Close: Soybean futures closed 1 ¾ cents lower yesterday, trading in a range of 9 ¾ cents on the day. Funds were estimated sellers of 3,000 contracts on the session.

Fundamentals: Export sales this morning came in at 554,000 metric tons, this compares with the expected range from 600,000-900,000 metric tons; last week’s export sales came in at 974,696 metric tons. Soymeal and soy oil are trading higher this morning which are offering support to futures, we will want to see volume confirm price on the floor open. Weather in South America will continue to be important going forward as they round out planting and get into crop development. There are no new updates this morning on that front. Next week’s USDA report will be a major catalyst for setting the tone to start the year, that is on the 12th and we will start providing estimates towards the middle of next week.

Technicals: Soybeans have been more or less consolidating between 960-970 after a bloodbath in the back half of December. The bulls still have a lot of work to do on the chart to get in good graces. A close above 971 ¾ opens the door to 985 ½-986 ½. This pocket represents the middle of the 100-day moving average and the 50% retracement from the June lows to the July highs. This will be a significant pocket before and after the USDA report. The chart remains bearish, but for those who want to be long into the report we have been recommending shopping for cheap call options over the week as it gives great exposure with limited risk.

Bias: Neutral

Resistance: 985 ¼-986 ½***, 999-1004**

Pivot: 971 ¾

Support: 950-952 ¼***, 937 ½***, 922 ¼****

 

WHEAT (March)

Yesterdays Close: Wheat futures closed 1 ½ cents lower yesterday, trading in a range of 5 on the day. Funds were estimated to have been sellers of 2,000 contracts for the session.

Fundamentals: Export sales this morning came in at 131,000 metric tons, this compares with the expected range from 225,000-500,000 metric tons and last weeks 487,352 metric tons. Colder and drier weather has been offering some support, but the damage may not be known until winter wheat comes out of dormancy. Keep in mind that we are also in a seasonally weak time of year. If you had sold March Chicago wheat on January 3rd and bought back on the 16th, you would have been profitable for 12 of the last 15 years with the average gain being nearly 18 cents. Some of that seasonality is likely due to weather premium coming in ahead of time and then going out.

Technicals: Wheat futures closed above the 50-day moving average for the first time in a long time earlier in the week, but it is not what we consider a “conviction close” as it more or less lingers right alongside it. If the market can achieve a conviction close above, we could see short covering come into the market to 447 ¼. We still like the bear side of the market but have been more than nimble with our first recommendation in weeks coming in this week to sell from 433-437. We have since reduced and would be looking to step back in on a confirmation of a failure here.

Bias: Bearish

Resistance: 435-437 ½ ***, 443-448 ¼ ***, 459-461 ¼**

Support: 429**, 416 ½-420 ¾**, 410 ½**, 399-402 ¾****

 

For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at http://dawtradingdiv.com/brokers-edge/

Disclaimer:

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.

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