CORN (March)
Yesterdays Close: March corn futures finished yesterday’s session down ½ of a cent, trading in a range of 2 ½ cents. Funds were estimated sellers of 6,000 contracts for the day.
Fundamentals: Informa Economics released their updated estimates for 2018 US plantings, they have it pegged at 89.187 million acres, this is down from their previous estimate of 89.675 million acres. Weather in South America continues to be important as it could have implications on near to intermediate term price action. Hot and try weather has been becoming more of a concern in Argentina with the possibility of yield loss. The market doesn’t seem to be putting any premium into the market, but Fridays February option expiration could be the catalyst keeping the market in check. Looking at open interest, 350 looks to be the magnet as of right now. There are about 60,000 total open calls and open puts at 350 and a nickel on each side. The weaker US Dollar is certainly supportive in the overnight and early morning session on the back of comments from Treasury Secretary Steve Mnuchin at the World Economic Forum in Davos.
Technicals: The overnight and early morning price action is encouraging, but expectations should once again be tempered as we approach the top end of the trading range from 354-355, above that there is additional resistance from 358 360 ½. If the bulls can achieve a conviction close above these levels, then the funds have a green light to cover some of their big short position; until then the bears remain in control. If the bears can defend technical resistance, we expect to see the market retreat and slide towards the bottom end of the range which we have defined as 345-346 ½.
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 soybean futures finished yesterday’s session up 2 ½ cents, trading in a range of 9 ¼ cents. Funds were estimated buyers of 3,000 contracts.
Fundamentals: Informa Economics released their updated estimates for US plantings in 2018, they have lowered plantings from 91.367 million acres to 91.197 million acres. Weather developments in South America continue to be the headline driver in the market. Hot and dry weather in Argentina is the primary focus as there could be the potential for yield loss. Weather in Brazil seems to be more favorable at this point in time. Soybean Meal has also been providing some support to the market, if we see a correction in the market, that could put pressure on beans.
Technicals: Soybean futures looked like they were going to roll over yesterday afternoon but managed to find support at the 200-day moving average. The inability to breakdown led to additional short covering from the funds. The overnight session has yielded similar results with the market trading lower but finding support at the same spot. The market is now near unchanged as we await the floor open for more volume to give us more direction. Key technical resistance remains at 986 ½- 989. This pocket represents the 100-day moving average along with the recent highs and the 50% retracement from the June lows to July highs. The fact that the market is knocking at the door for the last three sessions lends hands to another leg higher on a close above resistance. The next significant resistance doesn’t come in until 999-1004.
Bias: Neutral/Bullish
Resistance: 986 ½-989***, 999-1004**, 1020 ¼-1027****
Support: 979 ¼**, 971 ¾ ***, 961 ¼-963 ¼**, 950-952 ¼***
WHEAT (March)
Yesterdays Close: Wheat futures finished yesterday’s session down 3 ¾ cents, trading in a range of 5 ¼ on the day. Funds were estimated sellers of 3,500 contracts.
Fundamentals: Wheat futures are finding support this morning on the back of a weaker US Dollar. If the USD continues to fall, this could help the prospects of better exports. Exports have been a lagging catalyst which has kept a lid on the market. If we start to see a trend of better than expected exports, you can imagine that funds would start to cover some of their large short position. Export sales will be released on Friday due to the government shut down to start the week.
Technicals: March wheat futures are finding strength this morning thanks in large part to the dollar getting taken to the wood shed after comments from Treasury Secretary Steve Mnuchin. Though this may have temporarily stopped the bleeding, the bears remain in control. First technical resistance comes in from 428 ¾-430. If the bulls cannot chew through and close above technical resistance with conviction, we expect to see the market work towards the bottom end of the recent range which comes in from 410 ½-413 ¼.
Bias: Bearish
Resistance: 428 ¾-430**, 437**, 443-448 ¼ ****
Support: 410 ½-413 ¼***, 399-402 ¾****
For more information please contact DAW Trading at brokersedge@dawtradingdiv.com or at 877-329-0006 and visit us at https://dawtradingdiv.com/brokers-edge/
Disclaimer:
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. DAW Trading (“DAW”) uses various outside sources for research material regarding futures and options on futures trading therefore the views and opinions expressed in this letter may not necessarily reflect the view of DAW or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to DAW.