CORN (December)
Last weeks close: December corn futures traded 5 cents lower on the week, this after trading in a 9 ½ cent range on the week. We will get the updated commitment of traders report this afternoon which will give us an idea of where funds stand.
Fundamentals: Market participants have been looking for a fundamental catalyst to break this market out of its narrow sideways trade. Last week’s USDA report showed a record corn yield with big increases in states we had major concerns about earlier in the year. Iowa was one of those concerning pockets in the corn belt, but their yields were revised up another six bushels to 197. Iowa was not the only state to see a higher revision, in fact all but two of the top 20 states saw yields increased or unchanged. With the USDA report behind us, we will see more people putting a heavier weight on developments in Brazil and Argentina as they continue to plant and get into the crop development stages.
Technicals: If you had just been watching price action for the first 10 minutes following Thursdays USDA report you would have thought that the report was neutral. Prices initially dipped lower but failed to break down below contract lows and then traded back up to where we were trading pre-report. The market eventually faded in the afternoon but caught a small rally on Fridays session. This price action could indicate that funds are unwilling to add significant exposure to their large short position (a record for this time of year) at these levels. If the market cannot break on the back of a bearish report, we could see funds buy back corn and reduce their position. First technical resistance comes in at 350 ½, this represents the 50-day moving average. The more significant level to breakout above comes in at 355 ¼. On the flip side, first support comes in at last week’s lows of 340 ¾. Remember the bottom is a process not a point so be patient.
Bias: Bearish
Resistance: 350 ½**, 355¼***, 360-362***
Support: 340 ¾*, 334-335 ½***, 323-325 ¼**
SOYBEANS (January)
Last weeks close: January soybean futures managed to close near unchanged on the week after trading in a 24 ¾ cent range on the week; that trading range was also the range for Thursdays session. We will get the updated commitment of traders report this afternoon which will give us an idea of where funds stand.
Fundamentals: Market participants will begin turning majority of their attention to weather and crop developments in South America as they continue to roll through their planting season. Brazil is estimated to be 57% planted which is right around pace with the average. Last week’s USDA report
showed yields unchanged from the previous report. 15 of the 20 major producing states were left unchanged or revised lower but the five states with increased yields managed to offset that.
Technicals: The soybean chart has been very constructive over the past two months but saw some damage done to it following Thursdays USDA report where we saw a close below trendline support from the august lows. We still feel there is good value from 984 ½ down to 980, this pocket represents the 50% retracement from the June lows to the July highs, it also contains the 50, 100, and 200 day moving average. A break and close below could lead to long liquidation from the funds, the next support doesn’t come in until 968 ¼. On the flip side we see first technical support at 992, this represents the old trendline support (previous support now becomes resistance.
Bias: Bullish
Resistance: 992**, 999 ¼-1004 ¾**, 1014**, 1021 ½****
Support: 980-984 ½***, 968 ¼****, 957-963 ¼****
WHEAT (December)
Last weeks close: December wheat futures closed 4 ¾ cents higher last week, trading in a range of 15 ¼ cents. We will get the updated commitment of traders report this afternoon which will give us an idea of where funds stand.
Fundamentals: Last week’s USDA report offered a hint of fundamental support to the market which is a win for the bulls in the market. Ending stocks for wheat came in at .935 billion bushels, this was a hair below the low end of estimates from .940-.980. World ending stocks came in at 267.53 million metric tons, this was within the estimated range from 261-269 million metric tons. We also saw good exports last Thursday; the bulls will want this continue to be a trend not just a flash in the pan in order to encourage additional support.
Technicals: The market has seemingly halted its downward slide and has taken to a sideways trade over the last two weeks. The bears will remain in control until we see consecutive closes above technical resistance. Our resistance pocket comes in from 438-443, this represents the 50-day moving average and the recent highs. The 50-day moving average is a very simple indicator, but we find it significant for this specific chart since we have not closed above it since July. If we do see the market work higher and close above resistance, we could see funds start to cover a portion of their net short position.
Bias: Bearish
Resistance: 438*** 443****, 462 ¾**, 478-479****
Support: 422 ½*, 415 ¼**, 399-402 ¾****, 390-392 ¼**
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