CORN (March)
Yesterdays Close: March corn futures finished yesterday’s session down ½ of a cent, trading in a range of 3 ¼ cents. Funds were estimated sellers of 5,000 contracts.
Fundamentals: Recent weather in Argentina has prompted concerns over yield loss, if realized this could be a catalyst to achieve a technical breakout and encourage short covering. We have February option expiration on Friday and 350 looks to be the magnet. As of this morning there are roughly 33,000 open calls between 350 and 355. On the put side, there are roughly 27,000 open between 350 and 345. Strikes with high open interest tend to be a manet into expiration. We had mentioned in yesterday’s report that export inspections would not be released due to the government shutdown, we were then told otherwise shortly after our release, so we apologize for that. Export inspections came in at 668,944 metric tons, this compares to the expected range from 800,000-1,000,000 metric tons; last weeks was 584,389 metric tons.
Technicals: Yesterday morning corn prices were lingering at the top end of the range again, an area where expectations need to be tempered. I would love nothing more than to see corn rally, but you have to trade the market you have, not the one you want. The market rejected the top end of the range and that brings us right back down towards the 350 level which continues to be a magnet. We continue to believe there is an opportunity to trade a few pennies on either side until we get that technical breakout or breakdown.
Bias: Bearish
Resistance: 354-355**, 358-360 ½****, 366 ½-369 ¼****
Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**
SOYBEANS (March)
Yesterdays Close: March soybeans gaped higher on the open, finishing the session up 8 ¼ cents, trading in a range of 7 ¼. Funds were estimated buyers of 7,000 contracts.
Fundamentals: Hot and dry weather in key growing areas in Argentina sparked the gap higher yesterday and the market managed to hold ground on the back of those concerns. If we start to see moisture work into the forecast, you can expect that premium to come out of the market. Export inspections yesterday morning came in at 1,419,430 metric tons, this was above the top end of the expected range from 1,000,000-1,400,000 metric tons. Last week’s number came in at 1,231,037 metric tons. February option expiration is this Friday, it is possible that this could keep a lid on another leg higher but there’s nothing significant to report in terms of significant open interest at a specific strike (like corn).
Technicals: The market has managed to close higher for 6 of the last 6 sessions and it appears we could see number 7 today. Despite the march higher, the RSI (relative strength index) is only at 60. Technical resistance has been tested yesterday and is again being tested in the early morning session. We have defined resistance as 986 ½-987. This pocket represents the 100-day moving average and the 50% retracement (middle of the range) from the June lows to July highs. If we fail to see an extension we would not be surprised to see the market come back to support wit the first line in the sand coming in at 979 ¼, but the more significant level is 971 ¾. If you’ve been wrong for the past week and a half this is where you should consider reducing. We still think there is more upside potential but a consolidation lower would be healthy. There is seasonal buy around the corner, we will keep you posted on that when we get closer.
Bias: Neutral
Resistance: 986 ½-987***, 999-1004**
Support: 979 ¼**, 971 ¾ ***, 961 ¼-963 ¼**, 950-952 ¼***
WHEAT (March)
Yesterdays Close: March wheat futures gaped higher yesterday and finished up 4 cents, trading in a range of 4 ¼ cents on the day. Funds were estimated buyers of 2,000 contracts.
Fundamentals: Export inspections yesterday morning came in at 337,980 metric tons, this was within the expected range from 250,000-400,000 metric tons; last weeks was 368.651 metric tons. We know that funds have established a solid net short position, but we do not see any fundamental catalyst at this point that would spook them out just yet. Demand continues to be lackluster which will likely keep a lid on any significant rally. February option expiration is on Friday, there is nothing that sticks out in terms of strikes with significant open interest.
Technicals: The market looks like it is rounding out after trying to recover all of the loses from the most recent USDA report. First technical resistance today comes in at 429 ½, if the market can achieve a conviction close above this level, perhaps we see some short covering from funds push prices towards 443. A failure to breakout will likely lead to a test of the contract lows at 410 ½.
Bias: Bearish
Resistance: 429 ½-430**, 437**, 443-448 ¼ ****
Support: 410 ½-413 ¼***, 399-402 ¾****
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