CORN (March)
Yesterdays Close: March corn futures closed up ¼ of a cent after trading in a range of 4 ¼ cents on the day. Funds were estimated buyers of 3,000 contracts on the session.
Fundamentals: The corn market lacks a strong fundamental driver which has kept the market in check for some time now. In the near term, we will likely see the choppy sideways trade continue. We did get updates from Informa Economics on their Brazilian crop estimates; they expect 2017/2018 production to come in at 89 million metric tons, this is down 3 million from their previous estimate. We do have a USDA report out next week, this will give us an updated look at their Word Agricultural Supply and Demand Estimates (WASDE). We hope to have a convenience table available for you over the weekend. South American weather will likely steal much of the spotlight over the intermediate term. Talks of La Nina have picked up and if we do see that play out, we could see a drier Argentina have an effect on their end production number.
Technicals: The corn market failed against the 50-day moving average to start the week but did manage to mark higher highs with that. The market has retreated but are holding higher lows, the combination of higher highs and higher lows over the past 2-3 weeks should be moderately encouraging for the bulls. We want to see confirmation of a change in trend by consecutive closes above technical resistance. If the bulls can achieve this, then perhaps we see additional short covering from the funds who have accumulated a very large short position. Until we see a fundamental change give us a technical breakout, we will keep our bearish bias in play.
Bias: Bearish
Resistance: 358-360 ¼****, 369 ¼-370 ½***, 375****
Support: 348 ¾-350**, 334-335 ½***, 323-325 ¼**
SOYBEANS (January)
Yesterdays Close: January soybean futures finished yesterday’s session up 10 cents, this after trading in a range of 17 ½ cents on the day. Funds were estimated to have been buyers of 9,500 contracts.
Fundamentals: Soybeans have picked up momentum on song soybean meal demand. We have seen January meal futures rise from 325 to 348 in the matter of just 4 trading sessions. This puts the market just shy of the highs of the year at 349.7. Informa Economics released their updated estimates for Brazilian production, they see it at 110 million metric tons, this was down 1 million metric tons from their previous estimate. The USDA will have their updated world supply and demand numbers out next week, we will have estimates in a convenience table for you over the weekend. South American weather will be the intermediate term catalyst as those developments will likely play a roll in price action. Talks of La Nina have some concerned that final production in Argentina could come in lower than previously expected.
Technicals: Soybeans saw follow through strength yesterday, pressing prices to their highest levels since the end of July. This momentum could continue to take us higher towards our target of 1021 ½, this represents a key Fibonacci retracement level from the years range. If the market can accelerate and achieve consecutive closes above 1021 ½, there is not a lot in the way until the 1040 area. We know that funds have been establishing along position recently and we do not see much of a reason for them to liquidate that as seasonality and technicals are in their favor. Soybean meal futures have been a major catalyst, but keep in mind that that market is now in overbought territory with the RSI over 77. This is the most overbought we have been since the market peaked in July.
Bias: Neutral/bullish
Resistance: 1015**, 1021 ½****, 1036-1041**, 1054 ¼****
Support:1004**, 995 ¾**, 981 ½-986 ¼***, 968 ¼****
WHEAT (March)
Yesterdays Close: March wheat futures closed 2 ¼ cents lower yesterday, this after trading in a range of 5 ¼ cents on the day. Funds were estimated sellers of 3,000 contracts on the session.
Fundamentals: Wheat has been struggling to find a fundamental silver lining for several months now, and not much has changed in the last 24 hours. Informa Economics released some of their updated estimates which the market seemed to shrug of. The have the 2017/2018 Argentine wheat crop up 300,000 tons from their previous estimate to 18 million metric tons. Their Australian wheat crop estimates came in at 20.3 million metric tons, this was a reduction of 1.3 million metric tons from their previous estimate. We will get updated numbers from the USDA next week. Export sales will be released tomorrow morning as usual. The bulls need to see a trend of higher than expected exports. One big number is only an invitation for the bears to sell more.
Technicals: The market has been posting lower lows and lower highs over the past several months which has led to the funds accumulating a growing net short position. Although we remain bearish, we think that there may be an opportunity to sell at better prices. Technical resistance comes in from 445-449 ¾. If the bulls can achieve consecutive closes above resistance, we could see short covering from the funds, until then the bears are in control. On the support side of things, there is not much until 422 ½-424 ¼, this is recent contract lows and a previous level for the old December crop. A break and close below opens the door for a run towards prices with a $3 handle.
Bias: Bearish
Resistance: 445-449 ¾ ****, 452 ¾**, 468 ¾***
Support: 422 ½-424 ¼***, 412 ¾**, 399-402 ¾****
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