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Yesterdays Close: March corn futures traded 1 ¼ cents lower yesterday, trading in a range of f cents on the session. Funds were estimated sellers of 4,000 contracts.
Fundamentals: The market has been looking for fundamental catalysts to perk this market up; there have been some bright spots but nothing to spark a short covering rally. Yesterday’s weekly ethanol report showed that we used a record 110.1 million bushels of corn last week, this was up from 105.9 in the previous week and 105.2 in the previous year. We are currently up 15 million bushels of corn from last year. Canada released their production estimates yesterday, they have their production at 14.1 million tonnes for 2017, this was up 6.8% from the previous year. Market participants are keeping a close eye on weather in Argentina as the possibility of La Nina could lead to dry weather and decreased production. This morning’s export sales came in at 876,400 metric tons, this was within the expectations.
Technicals: The market has made attempts to rally this week but most of that was in the overnight sessions on light volume. The market is relatively neutral as the 350 level looks like it will be a magnet for this March contract as it was for the December contract. We are moving our bias from bearish to neutral as we settle in here. We think there is opportunity to the buy side but for multiple reasons, but it is important to temper expectations as we mentioned last week. The 50-day moving average will continue to be key technical resistance for us, this has presented some great trading opportunities over the past few months.
Resistance: 358-360 ¼****, 369 ¼-370 ½***, 375****
Support: 348 ¾-350**, 334-335 ½***, 323-325 ¼**
Yesterdays Close: January soybean futures closed 11 cents lower, trading in a range of 19 ¼ cents on the day. Funds were estimated sellers of 9,000 contracts.
Fundamentals: The market had been cruising higher recently but saw some profit taking yesterday as forecasts show that Argentina could receive some rain over the next two weeks. Weather developments in South America will continue to be on the forefront of most trader’s radar, but keep in mind we do have a USDA report out next week that could also put some volatility into the market. This morning’s export sales came in at 2,015,800 metric tons, this was well above the high end of expectations and could potentially offer some support today.
Technicals: The market failed to take out the highs of the week yesterday which led to some long liquidation from the funds. That selling pressure triggered stops and took us right back down to fill the gap at 995 ¾ which offered phenomenal support on the first test. The fact that the market couldn’t rally from that point should make the bulls a little nervous here in the near term. We would like to be buyers back towards the 984-988 level which represents the 50-day moving average and the 50% retracement on the year. If the market breaks and closes below this pocket, we could see additional long liquidation down towards 968. The market has been offering some great opportunities to be proactive as we continue to be mostly rangebound over the past three months.
Resistance: 1001-1004**, 1015**, 1021 ½****, 1036-1041**
Support: 984-988***, 977 ¼**, 968 ¼****
Yesterdays Close: March wheat futures closed 7 cents lower yesterday, trading in a range of 9 cents. Funds were estimated sellers of 4,500 contracts on the session.
Fundamentals: Wheat took some heat yesterday as fundamentals continued to linger over the market. We have been talking about fundamentals keeping a lid on the market which means rallies are opportunities to sell. Export sales this morning came in at 321,400 metric tons, this was within expectations, but the market rally wants to see a beat on these weekly numbers considering the bar is set pretty low.
Technical: Lower highs and lower lows continue to be the trend as we make new contract lows here in the early morning session. We have first technical support from 422 ½-424 ¼, this was a big level for the December contract and will be so again for March futures. We expect to see a break down and would not be surprised to see the market make a run towards the $3 handle. On the resistance side of things, the 50-day moving average is the significant level. We have not seen the market close above this indicator since July. The bears will remain in total control until we see a breakout lead to short covering from the funds.
Resistance: 440 ½**, 445-449 ¾ ****, 452 ¾**, 468 ¾***
Support: 422 ½-424 ¼***, 412 ¾**, 399-402 ¾****
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