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May Corn futures
Yesterday’s Close: May corn futures finished yesterday’s session down 1 ¼ cents, trading in a range of 5 ¼ cents.
Fundamentals: Export inspections came in at 795,241 metric tons, within the range of estimates but closer towards the lower end. April options expire Friday’s close which may play a role in near term price action. Looking out over the intermediate term we continue to be friendly the corn market. Funds hold a very large net short position ahead of a planting season where there will surely be concerns. In our opinion, this puts the risk to the upside due to the chance of a short covering rally.
Technicals: The market took a breather yesterday and retreated off of the early morning highs, still managing to hold technical support which we had defined as 370-372 ¼. The bulls need to defend this pocket on a closing basis to keep the tide in their favor here. On the resistance side of things, the pocket we have our eye on is 380-383 ¾. This would be a target area to consider reducing long exposure if you were able to buy lower prices.
Resistance: 380-383 ¾****,387 ¾**, 393-395***
Support: 370-372 ¾***, 360-361***, 350**
May Soybeans futures
Yesterday’s Close: May soybean futures finished yesterday’s session down 3 ¾ cents, trading in a range of 9 ¾ cents.
Fundamentals: Export inspections came in at 841,888 metric tons, within the range of expectations but (as with corn) towards the lower end. There has been a standstill in trade talks/headlines which could continue through the rest of the month with no meetings scheduled. We are not as optimistic (more neutral) on soybean prices as we are on corn, but if funds start to cover it may provide spillover strength/buying into beans.
Technicals: Prices retreated towards the psychologically significant 9.00 handle yesterday but managed to defend it rather well, leaving the technical landscape little changed. We see resistance coming in from 913 ¾-916 ½, this pocket represents a key retracement, along with the 100 and 200 day moving averages. If the bulls can achieve consecutive closes above this pocket, there is room to work higher, towards 30. A failure to find follow through momentum will likely lead to price consolidation.
Resistance: 913 ¾-916 ½***, 924 ¾**, 929 ¼-934 ½***
Support: 900-904 ¼***, 884 ¾-887 ¾**, 870-873 ½***
May Wheat Futures
Yesterday’s Close: May wheat futures finished yesterday’s session down 3 cents, trading in a range of 9 ½ cents.
Fundamentals: Export inspections yesterday morning came in at 353,727 metric tons, below the low end of expectations. We continue to be optimistic on near term prices, mostly due to overall money flow potential in the grain space. We are most friendly the corn market but feel strength there would help provide support to wheat.
Technicals: yesterday’s trade did little to change the technical landscape, leaving our support and resistance levels/targets intact. If the market can continue to defend support levels, it looks like we could see the market work towards 472 ¼-475. This would be a pocket to consider reducing against if you had been a buyer at lower prices last week. We remain friendly the market but are expecting to see heightened volatility.
Resistance: 472 ¼-475****, 497 ½-504 ½****
Support: 447 ¼-450***, 434 ¼-441 ¾**, 425-427*
E-mini S&P (June)
Yesterday’s close: Settled at 2840.50, up 10.75
Fundamentals: Deja vu, equity markets are melting higher again this morning and not on any fresh favorable news. The global landscape is stable and tomorrow the Federal Reserve is expected to confirm a dovish narrative with little to no plans to hike this year (more emphasis on the ‘no plans’). They plan to end a streak of quarterly hikes and provide a timeline to finish unwinding their balance sheet. The Federal Reserve is in the driver’s seat, they will essentially end their tightening cycle tomorrow and nothing else seems to matter. Not an elusive China trade deal that took a step backwards in recent weeks, not Brexit chaos and certainly not first quarter earnings growth projected to come in at -2.5%.
This morning, ZEW Economic Sentiment data in both Germany and the Eurozone was less-pessimistic than expected; whoever said pessimism was a bad thing. In the U.S, we look to January Factory Orders. Will it come in below expectations for the fourth month in a row? Will it contract for three out of those four? We will find out at 9:00 am CT.
Technicals: Both the S&P and NQ are higher this morning and price action confirms yesterday’s breakout close. The next level of resistance in the S&P comes in at 2878.50, this is the high from January 29th last year and would essentially create the right shoulder of a potential head and shoulders pattern. For the NQ, 7436 is the next level of resistance, this was the weekly close after it set a new all-time high and before opening the following Monday lower. To the downside, support in the S&P aligns Friday’s high and yesterday’s settlement in which we have gapped higher. First key support in the NQ aligns what was a major three-star resistance peak from October with yesterday’s settlement. A move below these levels today will only neutralize this immense strength in the immediate-term term.
Support: 2836.50-2840.50**, 2826.75-2629.75***, 2619.50**, 2808.50-2810.50**
Support: 7360.75-7368.50**, 7311-7324.24**, 7241-7267.75***, 7210-7211**
Crude Oil (May)
Yesterday’s close: Settled at 59.38, up 0.56
Fundamentals: WTI Crude Oil is higher this morning and staring down the barrel at $60 for the first time since November 12th. A broadly strong risk-environment around the globe has helped keep a path of least resistance higher during this seasonally bullish time of year. However, the heavy lifting has come from Saudi Arabia. Not only have they followed through on promises to reduce both production and exports, they have promised to do more. Furthermore, yesterday’s comments from the Saudi Oil Minister that they are still working to relieve the glut emphasizes their patience which in turn has continued to invigorate the bull case. Inventories will come into the picture as the day develops and the private API survey is due at 3:30 pm CT.
Technicals: Price action is flirting with our major three-star resistance upside target at 59.63 and has come within an eyelash of achieving $60. While we have been upbeat and fairly Bullish in Bias Crude over the last month, we remain steadfast Neutral as of Friday and see limited upside in the very near-term.
Resistance: 59.63***, 60.92-61.28**, 61.94***
Support: 58.82**, 58.26-58.37**, 57.35-57.57***, 57.06*, 56.54**, 55.44-55.56***
Yesterday’s close: Settled at 1301.5, down 1.4
Fundamentals: Gold is higher this morning after somewhat of a disappointing second half to yesterday’s session. Regardless of such, the metal has not fundamentally or technically done anything wrong and ‘patiently’ awaits the Federal Reserve’s policy statement and projections on Wednesday. Treasury prices have taken a sharp U-turn from overnight action and this could trickle-in to stop Gold’s firm start, however, a softer U.S Dollar is helping to offset this. January Factory Orders are due at 9:00 am CT and this will be closely watched to set a tone across Gold, Treasuries and the Dollar today.
Technicals: Gold is testing major three-star resistance for the fifth consecutive session, trading out above it for the second time in a week. Needless to say, today’s close will be crucial. Still, there is solid headwind with key resistance coming in at 1315.3. Support comes in below at 1298.1-1299.2 and the metal will remain constructive above here.
Resistance: 1304.7-1307.2***, 1315.3**, 1323.4-1326***
Support: 1298.1-1299.2**, 1291-1293.5**, 1273.2-1280***
LEJ9: -.675 at 128.425 trading in a range of 1.50
LEM9: .725 at 122.65, trading in a range of 1.125
GFH9: .325 at 141.65, trading in a range of 1.25
GFJ9: -.50 at 146.425, trading in a range of 1.225
Cattle Commentary: Cattle futures were mixed to start the week with front month futures under pressure but deferred mounting a rally. We would not be surprised to see additional pressure come into the April contract this week, following last week’s lack luster cash trade and somewhat mute expectations to start this week. Weather has certainly caused disruptions throughout Nebraska, but the packers don’t seem to be in a pinch. A monster rally in hog futures have likely played a role in price action and money flow.
PM Boxed Beef / Choice / Select
Current Cutout Values: / 228.33 / 218.21
Change from prior day: / 1.34 / .87
Choice/Select spread: / 10.12
Live Cattle (April)
April live cattle opened higher but spent little time trading in that positive territory. Today’s high marks lower highs, an area that the bears will want to defend through the first half of the week. A failure to do so would likely take us to new contract highs. First technical support this week comes in near 127.50-127.675, a break and close below here opens the door for a round of long liquidation, with the possibility of a move towards 124.95-125.50.
Resistance: 129.50-129.70**, 130.45-131.00***
Support: 127.50-127.675**, 124.95-125.50****, 123.50**
Feeder Cattle (April)
April feeder cattle started the week on softer ground, trading in a tighter range than we have seen over the last week and a half We mentioned the market being in a range, basically 147/148 on the top side and 143/144 on the bottom side. With prices near the top end of that range, the risk reward ratio favors the sell-side. A close above 147 would neutralize our stance. First support this week comes in from 145.45-145.70, this pocket represents the 50 and 100 day moving average.
Resistance: 147.325-147.85***, 148.50-149.00**
Support: 145.45-145.70***, 143.50-143.75***, 140.35-141.30****
Lean Hogs (April)
April lean hog futures continued higher, narrowing the spread with deferred months. As mentioned in our Weekend Ag Update, expect volatility to continue. We also mentioned: “if you buy or sell and plan on holding the position, just mentally prepare yourself for a 4.00 move against you at some point.”. The market traded in a range of 3.65 today alone. The market looks poised for a move out above contract highs of 73.425, but in a market like this, technicals go out the window.
Support: 68.80*, 67.525*
Session close: Settled at 1.14235, up 16 ticks
Fundamentals: The Euro notched its fifth positive session out of seven since bottoming after the ECB announced it will reintroduce TLTRO on March 8th. Early gains today dissipated a bit after the German Bundesbank released its Monthly Report which highlighted the economic slowdown that has so far dodged a recession. Also weighing on the tape was a weaker British Pound after the Speaker of the House said Prime Minister May could not bring her Brexit deal to another vote without notable changes. Overall, this was a quiet start to the week, but it won’t stay this way long. Tomorrow morning, we look to pivotal reads on ZEW German and Eurozone Sentiment and wage data at 5:00 am CT. At 9:00 am CT, January Factory Orders data from the U.S and Cap Goods Shipped Non-Defense are due. The Fed also kicks off their two-day policy meeting tomorrow, they conclude Wednesday at 1:00 pm CT and are not expected to hike rates. In our Tradable Events this Week, we dive into some of the things we are watching for from the Fed this week and the markets they could shake up: click here to read.
Technicals: After a steady recovery, the Euro faces strong overhead resistance at 1.1442-1.1450. This major three-star level aligns multiple indicators including a key .382 retracement and a trend line from the January peak; each define the Euro’s downtrend in their own manner. The Euro must close out above here in order to break the imminent downtrend and signal that this seven-session recovery is not merely a dead cat bounce. The bulls hold a near-term edge in attempting this resistance as long as price action stays above our 1.1414 pivot. A failure to do so would encourage waves of selling down to 1.1336-1.1337.
Resistance: 1.1442-1.1450***, 1.1492**, 1.1522-1.1549**
Support: 1.1378*, 1.1336-1.1337**, 1.12455-1.12695**, 1.11845-1.1213***
Session close: Settled at .90415, up 7 ticks
Fundamentals: The Yen has held ground well despite an ever-expanding risk appetite. Typically, when equity markets rise, the Yen fades. Although it has trended lower for much of the year, it has been constructive over the last week as stocks continue to extend yearly gains. Treasuries and Gold have also been buoyed by a sense of central bank dovishness and Wednesday’s FOMC policy decision is quickly approaching. There is no data out of Japan tonight, but we do look to critical sentiment reads from the Eurozone and Factory Orders from the U.S to set a tone in the AM.
Technicals: Price action is consolidating and tethered to the psychological .9000 mark. The roll was very healthy for the Yen in that the June contract is now out above the continuous 200-day moving average. Still, price action must now do something positive and a start would be closing out above first key resistance at .9051-.9076. A failure to hold .9008 on a closing basis will again give the bears an edge.
Resistance: .9051-.9076**, .9152-.9185***
Support: .8919-8931**, .88355-.8845***
Session close: Settled at .7109, up 14 ticks
Fundamentals: The Aussie jumped this morning along with commodity prices as the U.S Dollar lingers lower ahead of Wednesday’s Fed policy meeting. Risk sentiment has been boisterous over the last week and this has helped to keep a bid on the currency despite conflicting and frankly concerning news on the U.S and China trade front. President Trump and President Xi are now not expected to meet until June and the March 1st deadline has been erased. Furthermore, U.S Trade Representative Lighthizer’s Congressional Testimony last week would make you believe the two sides are further apart than headlines suggest (such as a great phone call between the sides on Friday). Overall, maybe no news is good news for now. Tonight, RBA Assistant Governor Kent speaks at 5:00 pm CT. House Price Index is due at 7:30 pm CT and the Minutes from the latest meeting are also released then.
Technicals: The Aussie has finished green in six out of the last seven sessions gaining just about a penny. This slow grind higher from oversold territory is testing major three-star resistance at .7117-.7130 and this aligns a key retracement level and a trend line. Like the Euro mentioned above, each indicator defines a recent downtrend. We see good value fading the slow grind higher, but you cannot stay short upon a close above this level.
Resistance: .7117-.7130***, .7152*, .7182-.7202**
Support: .7052-.7063*, .7006-.7014***
Session close: Settled at .7507, down 2 ticks
Fundamentals: The Canadian was elevated today by another strong session for Crude Oil and a soft tape for the Dollar on the heels NAHB Housing coming in just below expectations. Overall, the Canadian has worked hard to hold its ground despite a potential dovish twist by the Bank of Canada and extremely inconsistent economic data. There is no data out of Canada until Thursday and Friday. Until then, keep a close eye on the overall risk-environment, Crude Oil and the Dollar.
Technicals: Price action has struggled to climb out above the 50% retracement from the February high. We find the tape vulnerable due to the extreme overhead resistance at .7600 which we believe will deter buyers unless there is strong fundamental news. A continued close below .7516 and furthermore below .74945 will encourage the bears to take a shot.
Resistance: .7543-.7559**, .7600***, .7630**, .76595**
Support: .74945*, .7427-.7443***, .7330-.7347***
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