Published Jan-04-2018
CORN (March)
Yesterdays Close: March corn futures finished the day down ¼ of a cent, trading in a range of 2 ½ cents on the day. Funds were estimated sellers of 3,500 contracts.
Fundamentals: Corn futures continue to trade in a tight range thanks to the lack of new news coming across the wires. Export sales to start the week were within expectations at 683,898 metric tons. The bulls in the market will want to see better than expected exports on a consistent basis to get the market headed north. Due to the New Years holiday, we will have export sales out tomorrow morning. Ethanol numbers will be out later this morning, we have been seeing strong numbers in production over the last several weeks.
Technicals: Trade the market you have, not the one you want. March corn futures tested the 50-day moving average yesterday but ran out of gas to get out above which led to some light selling pressure in the back half of the day. This has been a key indicator for us as we have been able to see the market close above since July. If the market does achieve a close above resistance, we could see funds cover to 360 ¾. With that said, we are trusting the technical with tight risk measures and using this as an opportunity to sell. We continue to believe that there is an opportunity to trade a nickel on either side of 350 until we get a fundamental catalyst to give us a directional move other than sideways.
Bias: Bearish
Resistance: 354 ¼-355 ¼***, 360-361 ¾***, 375****
Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**
SOYBEANS (March)
Yesterdays Close: March soybean futures finished yesterdays session up 3 ½ cents, trading in a range of 6 ½ cents on the day. Funds were estimated buyers of 3,000 contracts.
Fundamentals: The market has managed to stabilize from chatter of weather concerns in South America, particularly in Argentina as the next 7-10 days looks dry. Wet weather is expected to move in after that, but the market is waiting for confirmation as we get closer. Many market participants will be waiting for next weeks USDA report on the 12th for nod on direction for the start of the year.
Technicals: The market has stabilized, but don’t think that the chart has instantly turned friendly. The selloff in December has left a lot of technical damage on the chart. Our first pocket of technical resistance remains intact from 967 ¾-971 ¾. If the bulls can chew through and close above, we could see a run back towards 985 ½-986 ½ before next weeks USDA report on the 12th. A failure to close will likely lead to funds extending their net short position. First technical support comes in from 950-952 ¼, a break and close below opens the door to a more significant 937 ½.
Bias: Neutral/Bearish
Resistance: 967 ¾-971 ¾**, 985 ¼-986 ½***, 999-1004**
Support: 950-952 ¼***, 937 ½***, 922 ¼****
WHEAT (March)
Yesterdays Close: March wheat futures closed up ¾ of a cent yesterday, trading in a range of 5 cents for the session. Funds were estimated buyers of 2,500 contracts.
Fundamentals: Concerns over winter kill have helped revive the wheat bulls, but those expectations should be tempered as we will not see the full affect until the crop comes out of dormancy in the spring. Kansas City wheat will be the contract you will want to keep a close eye on for that. Crop progress conditions showed a big drop in the December good/excellent ratings in Kansas (14%), Oklahoma (15%), Nebraska (13%), Colorado (12%).
Technicals: Wheat managed to close above the 50-day moving average, but failed to close above technical resistance at 437. The lack of conviction and follow through yesterday has some sellers stepping back into the market in the early morning session. We are looking for the market to retreat from here, the first line in the sand is 429, but the more significant support pocket comes in from 416 ½-420 ¾. Keep in mind that yesterday was the start of the seasonal; if you had sold March Chicago wheat on January 3rd and bought back on January 15th, you would have been profitable for 12 out of the last 15 years with the average gain being roughly 17 ¾ cents.
Bias: Bearish
Resistance: 435-437 ½ ***, 443-448 ¼ ***, 459-461 ¼**
Support: 429**, 416 ½-420 ¾**, 410 ½**, 399-402 ¾****