CORN (March)
Yesterdays Close: March corn futures finished yesterday’s session down 1 cent, trading in a range of 3 ½ on the day. Funds were estimated sellers of 6,500 contracts.
Fundamentals: Yesterdays weekly EIA ethanol report showed production increased to 1,061,000 barrels per day, this was a nice rebound from last week’s drop off to 996,000 barrels; in fact, it was the largest 1 week rebound on record. Export sales this morning came in at 1,888,300 metric tons, this was well above the expected range and a silver lining for the bulls. The bulls desperately need to see a trend of better than expected exports to get more excited. Weather and crop development in South America continue to be a talking point but there is not much new news on that front. If things change for the worse, we could see that spark some short covering from the funds who have a near record short position.
Technicals: Corn futures are firmer this morning, hovering along the 50-day moving average, an indicator the market has failed to breakout above for many months now. Although the bulls should be encouraged by this week’s trade, those expectations should be tempered as this is the top of the trading range over the last month. A failure to see a conviction close above technical resistance will invite sellers back into the market and press us back towards the low end of the range which we have defined as 345-346 ½. If the bulls can chew through these levels, we could see the market “run” towards 358-360 ½; I realize that doesn’t sound all that exciting but that is the world we live in for now.
Bias: Bearish
Resistance: 358-360 ½***, 367-369 ¼****
Pivot: 352 ¼
Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**
SOYBEANS (March)
Yesterdays Close: March soybean futures finished yesterday’s session up 3 ½ cents, trading in a range of 8 ¼ for the day. Funds were estimated buyers of 4,000 contracts on the session.
Fundamentals: Weather concerns in South America, particularly in Argentina continue to dominate the headlines. Soybean meal has been helping the cause for soybeans and will continue to be something you want to monitor. This morning’s export sales came in at 1,240,200 metric tons, this was on the high side of expectations. As with corn and wheat, the market needs to see a better than expected exports on a consistent basis to encourage more buying.
Technicals: The market has done a fantastic job of maintaining and building on strength from last Fridays USDA report. The close above 971 ¼ is encouraging for the bulls and lends hand to a move towards are target of 984-986 ½. This pocket represents the 50 and 100 day moving average, along with the 50% retracement from the June lows to the July highs. We think this will fail on the first test, so this would be the spot to reduce some long exposure. If the bulls can chew through it in short order it will encourage short covering from funds and accelerate buying towards the $10 handle. The 200-day moving average is minor resistance at 979 this morning.
Bias: Bullish
Resistance: 979**, 984-986 ½***, 999-1004**
Support: 971 ¾ ***, 961 ¼-963 ¼**, 950-952 ¼***, 937 ½***
WHEAT (March)
Yesterdays Close: March wheat futures finished the session up 3 ¼ cents, trading in a range of 4 ½ cents on the day. Funds were estimated buyers of 2,500 contracts.
Fundamentals: Export sales this morning came in at 153,100 metric tons, this is well below the expected range. Export sales continue to be a disappointment for the market despite the dollar on the lows (imagine if the dollar was on the highs). The bears remain in control until we start to see a trend of better than expected demand along with crop damage. If we don’t get significant damage to the crop it is likely we continue to see a lid on prices.
Technicals: Wheat has managed to grind higher for majority of the week but that has brought us back to technical resistance which we have been defining as the 50-day moving average. We have traded above it recently but there was a lack of conviction on the price action. A conviction close above it opens the door to short covering and a run towards 444, but until then it is an opportunity to sell against.
Bias: Bearish
Resistance: 430**, 437**, 443-448 ¼ ***
Support: 410 ½-413 ¼***, 399-402 ¾****
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