Corn
Last Week’s Close: May corn futures finished Friday’s session up 2 ¾ cents, extending gains for the week to 8 ¾ cents. Friday’s Commitment of Traders report showed funds holding a all-time record short position of 257,965 futures and options. The funds also hold a record net short position in grain and oil-seeds combined, short 504k futures and options.
Quick Take: We often say that the bottom is a process, not a point. Last week’s price action was extremely constructive to that process taking place. Looking at the chart alone, we would expect to see follow through momentum in this week’s trade. Positive technicals coupled with what we believe are positive fundamentals have us feeling very optimistic about higher prices over the intermediate term. Funds hold a record net short position with planting season just around the corner, a time of year where we seem to always get some weather premium baked into the market. The recent weather through the Midwest may be enough to spark those fears early and cause a meaningful round of short covering from the funds. Check out our daily Grain Express tomorrow morning for the levels to watch this week.
Soybeans
Last Week’s Close: May soybean futures finished Friday’s session up 10 ¾ cents, trading in a range of 12 ¾ cents. Friday’s Commitment of Traders report showed funds sold roughly 40,000 contracts for the week ending March 12th, putting their net short position at 90,197 futures and options. This is not a record net short position, but it is big enough to register in the top 10, coming in at the 8th largest short position on record. The funds also hold a record net short position in grain and oil-seeds combined, short 504k futures and options.
Quick Take: Soybeans managed to breakout above technical resistance on Friday, putting a more positive spin on the technical landscape. We want to be friendlier on soybeans but feel that of the three sisters (corn, beans and wheat), beans may be the least clear picture. Part of this due to the ongoing trade dispute with China. Check out our daily Grain Express tomorrow morning for the levels to watch this week.
Wheat
Last Week’s Close: May wheat futures finished Friday’s session up 7 ½ cents, extending gains for the week to 21 ¾ cents. Friday’s Commitment of Traders report showed funds holding a net short position of 72,148 futures and options and an all wheat short position of 130,327 futures and options. The funds also hold a record net short position in grain and oilseeds combined, short 504k futures and options.
Quick Take: Wheat futures had closed lower for 5 consecutive weeks, last week’s round of short covering helped to end that streak. Last week’s price action has constructive on the chart which has us feeling more optimistic about higher prices in the near-term. If the bulls can achieve consecutive closes above resistance in the first half of this week’s trade, we could see another round of short covering add 25+ cents to prices. Check out our daily Grain Express tomorrow morning for the levels to watch this week.
Live Cattle
Last Week’s Close: April live cattle futures finished Friday’s session up 1.725, trimming losses for the week to .675. Friday’s Commitment of Traders report showed funds holding a net long position of 128,713 futures and options, this is a good amount of length for funds to be holding.
Quick Take: In last week’s Weekend Update we talked about the funds net long position being a risk to long liquidation, we got that on Tuesday after the market broke down below trend line support from the November lows. In the back half of the week prices managed to retrace to that breakdown point, which now becomes resistance. It should be noted that the retracement was on light volume. From the risk/reward perspective, shorts have an advantage here. A close above resistance would neutralize the chart. Cash trade last week was reported at 127 in KS, WY, TX, and Western Nebraska, we believe this will be viewed as a disappointment to the board.
Feeder Cattle
Last Week’s Close: April feeder cattle finished Friday’s session up 2.325, trimming losses for the week to .775. Friday’s Commitment of Traders report showed funds bought back roughly 1,000 contracts through March 12th, trimming their net short position to 1,225 futures and options
Quick Take: Volatility has been the name of the game, over the past seven sessions, the average daily range has been 2.31. The volatility has been very non-directional as we continue to be confined to a range of 144-147 (give or take). This will be the range to continue to trade until we get confirmation of a true breakout or breakdown.
Lean Hogs
Last Week’s Close: April lean hogs finished Friday’s session limit up, extending gains for the week to 8.075. Friday’s Commitment of Traders report showed that funds bought back roughly 2,600 contracts through March 12th, trimming their net short position to a hair over 3,600.
Quick Take: The swift move higher has taken the RSI to overbought territory, this alone is not a reason to try and short the market. Trying to pick a top is just as dangerous as trying to pick a bottom, especially when funds still have a net short position, giving them plenty of room to build a sizeable net long position. The catalyst for that position reversal would be the ASF which has been documented for months, but only taken more seriously here over the last few weeks. Exports were great last week with China being a big buyer, if this becomes a trend, we could see this market continue to accelerate to the upside. Expect volatility to remain high, 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.
Corn (May)
Last Week’s Close: May corn futures finished Friday’s session up 2 ¾ cents, extending gains for the week to 8 ¾ cents. Friday’s Commitment of Traders report showed funds holding a all-time record short position of 257,965 futures and options. The funds also hold a record net short position in grain and oil-seeds combined, short 504k futures and options.
Fundamentals: Money flow and weather chatter will likely be the hot topic talking point this week, coupled with the large net short fund position. Market participants will also start gathering estimates for the end of quarter USDA report, we will have estimates out by next week.
Technicals: The market had a very constructive last week and we would not be surprised to see that momentum carry over into this week’s trade. Previous resistance now becomes support, we see that coming in from 370-372 ¼. 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.
Bias: Neutral/Bullish
Resistance: 380-383 ¾****,387 ¾**, 393-395***
Support: 370-372 ¾***, 360-361***, 350**
Soybeans (May)
Last Week’s Close: May soybean futures finished Friday’s session up 10 ¾ cents, trading in a range of 12 ¾ cents. Friday’s Commitment of Traders report showed funds sold roughly 40,000 contracts for the week ending March 12th, putting their net short position at 90,197 futures and options. This is not a record net short position, but it is big enough to register in the top 10, coming in at the 8th largest short position on record. The funds also hold a record net short position in grain and oil-seeds combined, short 504k futures and options.
Fundamentals: Soybean futures finished last week’s trade on a high note thanks to short covering from funds. Money flow will be key to watch this week as funds may look to continue reducing their short position. Trade talks with China have stalled and it may be another month before another meeting between delegates is set up. Market participants will also start gathering estimates for the end of quarter USDA report, we will have estimates out by next week.
Technicals: Soybeans started the Sunday night trade under pressure but have reclaimed that lost ground in the early morning trade. 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: 903-904 ¼***, 884 ¾-887 ¾**, 870-873 ½***
Wheat (May)
Last Week’s Close: May wheat futures finished Friday’s session up 7 ½ cents, extending gains for the week to 21 ¾ cents. Friday’s Commitment of Traders report showed funds holding a net short position of 72,148 futures and options and an all wheat short position of 130,327 futures and options. The funds also hold a record net short position in grain and oilseeds combined, short 504k futures and options.
Fundamentals: Short covering was a key player in last week’s rally to lift prices over 30 cents off of their lows. We will continue to keep a close eye on money flow as that will likely be a driver this week. Last week’s exports were less than impressive, we will want to see bigger numbers this week to help keep a near term floor in the market. Market participants will also start gathering estimates for the end of quarter USDA report, we will have estimates out by next week.
Technicals: If the market can defend support levels in the first half of the week, 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.
Bias: Neutral/Bullish
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 2829.75, up 17.50 on Friday and up 77.50 on the week
Fundamentals: U.S benchmarks are trying to pick up where they left off on quadruple witching Friday. The S&P traded out above the trio of failed front-month tops from October, November and December but given the previous roadmap for the June contract, a soft close could not confirm a breakout just yet. We look ahead to a pivotal week highlighted by Wednesday’s FOMC policy decision; their first quarterly meeting on the heels of five consecutive quarterly hikes. This was featured in our Tradable Events this Week along with three markets ripe for a swing; click here to read. Aside from the two-day policy meeting beginning on Tuesday, the U.S economic calendar is quiet in the first half of the week.
Coming out of the weekend, markets have entirely shrugged off headlines that a meeting between President Trump and Chinese President Xi is likely to be pushed out to June. Here, on Thursday, we said the meeting being delayed until “at the earliest April” tells us that it will be ‘much later than’. Both sides have lauded ‘progress’ for months but if you take a step back, there is no proof that the two sides are any further along than before the Summit at the G-20 Summit December 1st. Now, the only real progress has been by China’s offense avoiding a fresh round of tariffs and erasing the March 1st deadline. At the forefront, the two sides are hung up on how to enforce a deal. This was a talking point last week at U.S Trade Representative Lighthizer’s Congressional Testimony and it has been made clear that a deal that cannot be enforced is not a deal at all. Through the middle of last year, we have pounded the table that there are front-loaded growth tailwinds as companies placed orders ahead of tariffs. March 1st was such an important deadline. Now, a three-month extension with lingering uncertainties could be all that is needed to magnify the gap in fresh economic demand.
Also, leading headlines is further developments on Boeing. The stock is down 2.4% premarket after regulators launched a probe into the FAA’s approval of the 737 Max. Furthermore, Ethiopian transport minister said data shows “a clear similarity to the Indonesian crash.
Technicals: The S&P traded to a high of 2836.75 on Friday, our next level of major three-star resistance comes in at 2833.25-2840 and this aligns the peaks from October and November for the June contract. Regardless of which contract you are looking at, June or front-month, these peaks were in part created because of the immense technical damage and volume on October 10th and the same goes for the NQ. Price action in the S&P could not handedly close out above the 2819.50-2826.75 level which we are watching most closely. If the tape remains elevated above here today, this will continue to provide a path of least resistance higher and one that would lead to 2878.50, the high from January 29th. This is important because on the weekly chart, we could see a head and shoulders pattern develop with that peak being the left shoulder and the October high being the head. If price action begins to slip, a move below 2819.50 would work to neutralize the strength from late last week while pinning it to first key support at 2808.50-2810.50. On Friday, the NQ traded to a high of 7361 and could not get out above its major three-star resistance at 7368.50. Remaining contained below here will give the bears a chance to pierce first key support at 7311-7318.75, a level that the bulls have defended well by stepping in front of on Friday and overnight; such would work to neutralize the strength from late last week.
Bias: Neutral/Bearish
Resistance: 2833.25-2840***, 2878.50***
Pivot: 2819.50-2826.75***
Support: 2808.50-2810.50**, 2794.50-2798***, 2785.50-2788.25***
Crude Oil (May)
Last week’s close: Settled at 58.82, down 0.09 on Friday and up 2.39 on the week
Fundamentals: Crude is holding ground well and trading in a fairly tight range heading into the morning. April options expired on Friday and the May contract is now front month. Data from Saudi Arabia confirms they cut both exports and production in February. With production coming in at 10.243 mbpd, this sheds light on the additional cuts necessary in order to bring production “well below 10 mbpd”. Exports rang in at 7.25 mbpd and they plan to have those below 7 mbpd by April. Although we exclaimed on Friday this news was now priced into the market and we maintain this belief, it sheds light on the ground to go and the potential headlines that can be created on that path. We are firmly Neutral, and the May contract high was 59.25, just below our 59.63 upside target.
Technicals: Price action is consolidating below the 59.63 upside target but just as importantly is holding first key support at 57.88-58.26. This support aligns the previous swing highs from April with May and although we are Neutral, the bulls hold a clear upper hand until a move close below here. Still, the bears have their work cut out for them with an even stronger support level at 57.35-57.57.
Bias: Neutral
Resistance: 59.63***
Pivot: 58.61
Support: 57.89-58.26**, 57.35-57.57***, 57.06*, 56.54**, 55.44-55.56***
Gold (April)
Last week’s close: Settled at 1302.9, up 7.8 on Friday and up 3.6 on the week
Fundamentals: Gold is trying to edge higher heading into the morning and buoyed by low sovereign debt yields around the globe. The Dollar is marginally lower to start the week, and this is also a crucial factor for Gold as we look to Wednesday’s FOMC policy decision. Today, Capital Goods Shipped Non-Defense and NAHB Housing Markey Index are both due at 9:00 am CT.
Technicals: Gold is battling at major three-star resistance at 1304.7-1307.2 despite notching a close above this level and holding it only briefly on Wednesday. However, we see the metal battling back as demonstrating its broader strength and the ability to achieve a close above there once again should invite further buying to the table. First key support comes in at 1298.1-1299.2 and the metal remains immediate-term constructive above here.
Bias: Bullish/Neutral
Resistance: 1304.7-1307.2***, 1315.3**, 1323.4-1326***
Support: 1298.1-1299.2**, 1291-1293.5**, 1273.2-1280***
NQ (June)
Resistance: 7368.50***, 7436***
Support: 7311-7318.75**, 7241-7267.75***, 7210-7211**
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