*Wheat seasonal starts today
CORN (March)
Yesterdays Close: March corn futures finished the first trading day of the year up 2 ¼ cents, trading in a range of 3 ½ cents on the day. Funds were estimated buyers of 5,500 contracts.
Fundamentals: Export sales yesterday morning came in at 683,898 metric tons, this was within the expected range from 575,000-800,000 metric tons. Cold weather sparked some concern and put some premium into the wheat market which likely spilled over to support corn in the first trading day of the year. The overhang of ample supplies could keep a lid on any significant rally until we get updated news on that front, that could come in the January 12th USDA report. This report holds a lot of information, so it could set the tone for the first half of the year. There is not much new news to report this morning on the weather and crop development in South America.
Technicals: The market has worked its way back to the 50-day moving average, an indicator we have been referencing as resistance for months. We have tested this indicator a handful of times in the last two months but have not been able to see a conviction close above to encourage fund short covering. We have been suggesting there is opportunity to trade a nickel on either side of 350 and here we are. 350 has been a magnet for front month futures over the past several months and we see that continuing until we get a fundamental catalyst to give us new direction (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 closed up 3 cents to start the year, trading in a range of 11 ¼ cents. Funds were estimated buyers of 2,500 contracts.
Fundamentals: Export inspections yesterday morning came in at 1,139,436 metric tons, this was within the expected range from 1,100,000-1,300,000 metric tons. Bulls need to see better than expected export sales on a consistent basis to really get the market going in 2018. Weather and crop development in South America will continue to be a key catalyst in the intermediate term, there is not much new news to report on that front today. Many market participants will be looking forward to the January 12th USDA report, this is typically a big one and could set the tone for the first half of the year. We will start compiling estimates over the next week.
Technicals: Soybeans gaped higher to start the year and had a choppy first session of the year. First technical resistance remains intact, that comes in from 967 ¾-971 ¼. This is being tested in the early morning session but will need to see more volume for confirmation. If the bulls can achieve a close above this pocket, we could see a continuation towards 985 ¼-986 ½. This pocket represents the 50% retracement form the June lows to the July highs, it also contains the 100-day moving average and was the breakdown point on December 14th. On the support side of things, 950-952 ¼ is the first area; a break and close below opens the door to another leg lower towards 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: Wheat futures closed up 7 cents to start the year, trading in a range of 8. Funds were estimated to have been buyers of 5,000 contracts on the session.
Fundamentals: A seasonal wheat trade starts today; if you had sold March wheat on January 3rd and bought back on January 16th, you would have been profitable for 12 of the last 15 years with the average gain being roughly 17 ¾ cents. This brutal cold has been supportive of wheat futures as concerns of winter kill add some premium to the market. Weather patterns are “warming” up so it will be interesting to see if this premium comes back out of the market ahead of the January 12th USDA report. Yesterday’s export inspections came in at 274,506 metric tons, this was below the expected range from 300,000-600,000 metric tons. The bulls really need to see better exports in the first half of the year to really get something going. Ample global supplies continue to keep a lid on any significant rallies of the last six months.
Technicals: The market has works its way back to the 50-day moving average which has been an indicator we have been referencing for several months now as the market has not been able to get a conviction close above here for many months. We view this as an opportunity to sell on the first test. Consecutive closes above here opens the door to some additional short covering into the USDA report on the 12th. The next resistance pocket comes in from 443-448 ¼ which represents previous resistance and the 100-day moving average. If the market fails to breakout we will be looking for a retreat back to 416 ½-420 ¾.
Bias: Bearish
Resistance: 435-437 ½ ***, 443-448 ¼ ***, 459-461 ¼**
Support: 416 ½-420 ¾**, 410 ½**, 399-402 ¾****
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