CORN (March)
Yesterdays Close: March corn futures closed up 1 cent yesterday, trading in a range of 2 ¾ cents on the session. Funds were estimated buyers of 4,000 contracts.
Fundamentals: Yesterdays weekly ethanol report showed the second highs production number on record (which was the previous week) at 1,089,000 barrels per day. Ethanol stocks decreased 7 million gallons from the previous week, but we are still up 17% from last year. USDAs estimated corn use for ethanol is at 5.525 billion bushels, this is up from 5.475 billion in November. These are strong numbers but not strong enough to ignite a bull trend which makes you wonder where corn would be if these were smaller figures. Export sales this morning came in at 866,900 metric tons this compares to the expected range from 700,000-1,100,000 metric tons. This was a decent number, but the bulls want to see more consistent beats in order to provide more than support to the market.
Technicals: The market was in consolidation mode yesterday, lingering right near that psychologically significant 350 level. We have been talking about that 350 being a magnet for the old December contract and continuing to be so for the March contract until we can get a catalyst to give us a technical move (other than sideways). If the market does break and close below 345, it is very possible we see the market bleed another 10 cents towards 335. The market could rally to 357 ¾ and the bears would still be in control, so be sure to temper your expectations if we do see a firmer trade. The trend is your friend and that has been sideways to lower over the past several months.
Bias: Neutral
Resistance: 358-360 ½****, 369 ¼-370 ½***, 375****
Support: 345-348**, 334-335 ½***, 323-325 ¼**
SOYBEANS (January)
Yesterdays Close: January soybean futures closed 3 ¼ cents higher yesterday, this after trading in a 5 ½ cent range on the day. Funds were estimated buyers of 6,000 contracts on the session.
Fundamentals: Export sales this morning came in at 1,450,000 metric tons this compares to the expected range from 1,400,000-2,000,000 metric tons, last week’s number was 2,015,794 metric tons. South American weather continues to be one of the key catalysts. The Argentinian forecast has been wetter than expected in the near term but looks to be drying out over the next week and a half to two weeks. If the La Nina does live up to the hype, it is potential that we see the drier weather have a direct effect on yields which would likely put some premium into the market and offer support.
Technicals: Soybeans saw their first positive close in six sessions yesterday, but that momentum has not carried over into the overnight and early morning session. The market posted its lowest price since November 17th and looks like it could make a run towards 967-968 ¼. Keep in mind that the overnight and early morning session are on light volume, we will want to see volume confirm price on the floor open. If the market can get back above the 100-day moving average and yesterday’s highs, we could see buyers step back into the market, that pocket comes in from 979 ¼-981 ½. Just above that is the 50% retracement for the year at 984 ¾ and the 50-day moving average is at 989; needless to say, the bulls have some hurdles to get over.
Bias: Bullish
Resistance: 984 ¾-989**, 999-1004**, 1015**, 1021 ½****
Support: 967-968 ¼****, 962 ½-963 ¼**, 947 ½**
WHEAT (March)
Yesterdays Close: March wheat futures closed up 5 cents yesterday, this after trading in a range of 6 ¼ cents on the day. Funds were estimated to have been buyers of 4,000 contracts on the session.
Fundamentals: Export sales this morning came in at 588,800 metric tons, this compares to the expected range from 250,000-450,000 metric tons. This is a good number, but a standalone export sales point will not be enough to rally the market for an extended period of time. The bulls really want to see a trend of better than expected exports to encourage short covering and put a floor in the market. We have been talking for several months now about ample supplies and poor demand weighing heavy on the market and that will keep a lid on any significant rally.
Technicals: The market is nearly 10 cents off of the lows from the beginning of the week, but bullish expectations should be tempered. First technical resistance for us comes in at 424 ¼. If the market closes above this pocket, we could see additional short covering which would set up as a great sell opportunity in our opinion. The trend over the back half of the year has been lower highs and lower lows with funds extending their net short position. The bears will remain in control until we start seeing consecutive closes above 443-445 ¾.
Bias: Bearish
Resistance: 424 ¼**, 430 ½-433 ½**, 443-445¾ ****
Support: 399-402 ¾****, 392-394**, 381-383 ¾***
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