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Last Weeks Close: March corn futures finished the last trading day of the year down a penny, trading in a whopper of a range at 1 ¼ cents. Fridays Commitment of Traders report showed funds have a net short of 206,624 contracts, this was a reduction of 15,529 from the previous weeks short of 222,153. Although they did cover a small portion, this is still one of the most bearish positions they’ve had for this time of the year. For the year, front month futures were unchanged. Literally; March ‘17 corn finished last December 30th at 351.
Fundamentals: Corn needs some new news to start 2018 off on a good foot, that may not come until the January 12th USDA report which gives us a look at final numbers. Exports have been less than exciting which has kept a lid on any significant buying interest. Ethanol production has certainly been a sliver lining to the market but has come short of sparking a move. Weather and crop development in South America will continue to be watched very closely. It appears that producers have been able to close the gap with their average progress pace for this time of year.
Technicals: The market has been posting lower highs and lower lows over the course of the back half of 2017 but seems to have found a magnet for front month futures near 350. We continue to believe that there is opportunity to trade a nickel on either side of this level. First technical resistance comes in from 354 ¼-355 ¼. This pocket represents the recent highs as well as the 50-day moving average, an indicator the market has struggled to close above since July. If the bulls can achieve consecutive closes above, perhaps we could see additional short covering from the funds press prices towards 361 ¾. On the support side of things, 345-346 ½ is the pocket to keep an eye on. If we do break and close below, we could see the market slide another 10 cents in a relatively short amount of time.
Resistance: 354 ¼-355 ¼***, 360-361 ¾***, 375****
Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**
Last Weeks Close: March soybean futures managed to squeeze out a 1 ¾ cent gain in last weeks shortened trade, thanks to a strong rally on Friday. The weeks range was 21 ¼ cents. In the weekly Commitment of Traders report we see that funds are now net short 69,091 contracts, this compares to the previous week where we saw them short 40,771 (keep in mind data is only compiled through Tuesday).
Fundamentals: As with corn, soybean exports have been decent, but not good enough to get the bulls excited. If this can change to start the year we could see buyers step back in. Again, we need better than expected exports, not within range or even top end of the range. Many market participants are looking forward to the January 12th USDA report where we will get a final read on US production numbers. Recent weather in South America has given producers the opportunity to close the gap in their planting delays. Their weather will continue to be one of the key catalysts. There are some concerns, but if those dissipate we could see additional pressure on prices as they will likely be on pace to produce another record crop.
Technicals: There has been a lot of technical damage done to the chart over the last month as we have seen funds flip from net long to net short. First technical support for the market comes in from 950-952 ¼. If the Bears achieve a close below, there is not a whole lot of significant support until 937 ½. On the resistance side, 967 ¾-971 ¼ is the first pocket, but the more significant hurdles come in from 980 ¼-986 ½. As mentioned last week, the chart looks ugly but if you wanted some upside exposure there are some appealing options that get you through the January 12th report.
Resistance: 967 ¾**, 980 ¼-985 ½***, 999-1004**
Support: 950-952 ¼***, 937 ½***, 922 ¼****
Last Weeks Close: March wheat futures closed up 2 ¼ cents last week, trading in a range of 8 cents on what was light holiday volume. Fridays Commitment of Traders report showed that funds reduced a small portion of their short position, leaving them net short 145,735 (Keep in mind that this data is compiled through Tuesday only).
Fundamentals: Wheat fundamentals have been less than impressive over the last 6 months, bulls are hoping for that to change this month with the January 12th USDA report. We have seen poor exports really keep a lid on things and we are going to continue using that trend. The bulls need to see consistently better than expected exports to really get things going. The silver lining for wheat could be the weaker dollar. If you have been reading our Morning Express, we have been looking for the dollar to continue softening which could be supportive to wheat.
Technicals: Wheat futures have managed to consolidate nearly 20 cents off of the lows, but the bulls should temper their expectations at these prices. The bears remain in control as we have been marking lower highs and lower lows over the past several months. Low volume rallies in a bear market typically leads to false hope Key technical resistance comes in at 435, this represents the 50-day moving average, an indicator we have not closed above since July. If the bulls can achieve consecutive closes above, perhaps we could see some additional short covering towards 449 ¾; until then, we look at this as an opportunity to sell.
Resistance: 435-437 ½ ***, 443-445¾ **, 450-452 ¾****
Support: 416 ½-420 ¾**, 410 ½**, 399-402 ¾****
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