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Yesterdays Close: March corn futures closed 1 ¾ cents higher yesterday, trading in a range of 2 ½ cents. Funds were estimated buyers of 4,500 contracts.
Fundamentals: Yesterdays ethanol report showed production at 1.077 million barrels per day, this was down 12,000 from the previous week but still marks the third highest production level on record; the only two higher weeks were the past two weeks. Ethanol stocks came in at 22.3 million barrels, this was down a modest .1 million barrels from the previous week. Export sales this morning came in at 1,558,300 metric tons, this compares to the estimated range from 800,000-1,100,000 metric tons. This is up 80% from the previous and a nice sliver lining going into the Christmas weekend. The bulls really want to start seeing a trend of better than expected exports to help support this market as we look towards 2018; a great number once a month will not do the trick. Weather will continue to be monitored closely in South America as well.
Technicals: January option expiration is tomorrow which could help intensify the magnet towards 350. The open interest on the 350 puts 11,402, there are 6,000 350 calls; there are 22,183 open at 360. January expiration is not as significant as other months (December), but should still be noted. In terms of chart technical, not much has changed as we continue to trade in tight ranges. We would be looking to trade a nickel on either side of 350 with tight stops. If we do get a technical breakdown with consecutive closes below 345, that would open the door to additional pressure towards the December contract lows of 335 ¼. On the flip side, the bulls want to see a conviction close above the 50-day moving average at 356 ½. This is a very simple indicator but is one we have not seen the market close above since July.
Resistance: 355-356 ½****, 369 ¼-370 ½***, 375****
Support: 345-348**, 334-335 ¼***, 323-325 ¼**
Yesterdays Close: January soybeans closed 2 ¾ cents lower yesterday, trading in a range of 7 ¼ cents on the session. Funds were estimated sellers of 5,000 contracts on the day.
Fundamentals: Export sales this morning came in at 1,742,900 metric tons, this is up 20% from the previous week. This compares with the expected range from 1,300,000-1,800,000 metric tons. As with corn, the market really wants to see better than expected exports become a trend to really offer some support to the market. Within expectations just doesn’t get the job done. Weather concerns in South America have seemingly evaporated for some areas. We will continue to keep a close eye on this as forecasts are consistently changing. If they do get better than expected weather, they could be set for another record crop.
Technicals: The sell off over the last two weeks has left a technical graveyard on the chart. The bulls need to see the market reclaim 967-968 ¼ in order to START repairing damage. This was previous support which was defined by the bottom end of the range along with a key Fibonacci retracement level from the June lows to the July highs. 950 is a psychologically significant level, just below that is a spike low at 947 ½ from the September 12th USDA report. The market is the most oversold since the end of May, this could encourage some consolidation as we head into the Christmas weekend. We are assuming that funds have not only been reducing, but have likely flipped net short at this point. The fear for the bull camp is that the funds will start accumulating a large net short position.
Resistance: 967-968 ¼****, 975 ½ -977 ¾***, 984 ¾-989**, 999-1004**
Support: 947 ½-949 ¾***, 922-929 ¼**, 915 ¼****
Yesterdays Close: March wheat futures closed 5 ¼ cents higher yesterday, trading in a range of 8 ¼ cents on the day. Funds were estimated buyers of 2,500 contracts on the day.
Fundamentals: Export sales this morning came in at 796,300 metric tons, up 35% from the previous week. This compares with the expected range from 300,000-600,000 metric tons. Wheat is no different than corn and beans in the sense that the bulls must start seeing better than expected exports to help put a floor in the market. Arguably this premise is most important for wheat with nearly every continent but Antarctica growing wheat. The bulls are hoping that low prices cure low prices, but we feel ample global demand will keep a lid on any significant attempt at a rally.
Technicals: 424 ¼ has been an important line in the sand for us recently, but we are trying to remain patient for 437 ½ to start selling again. This represents the 50-day moving average, a very simple technical indicator, but one we have not seen the market close above since July. If the bulls can achieve consecutive closes above here, we could see short covering from the funds; until then the bears remain in total control. A failure to break out above technical resistance will lead to continued pressure and a possible run towards the $3 handle.
Resistance: 424 ¼**, 437 ½ ***, 443-445¾ ****
Support: 399-402 ¾****, 392-394**, 381-383 ¾***
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