Yesterday's Close: March corn futures closed ¾ of a cent higher yesterday, trading in a range of 2-¼ cents on the day. Funds were estimated buyers of 2,500 contracts.
Fundamentals: There has not been much new news on the wires which has kept corn in tight range recently. Weekly EIA ethanol numbers will be out this morning, we have been seeing a strong trend here which has helped offer “support” to corn. We know that traders and other market participants are keeping an eye on South American weather and planting, but it seems majority are waiting for the January USDA report. With the end of the year just a stones through away, it is possible that we could see some position squaring, but we do not see any significant market moves from that. January option expiration is this week, there are nearly 12,000 puts open at the 350 strike; we think that this will provide a floor in the market as we head into the Christmas weekend.
Technicals: The market continues to linger near the 350 level which we think will continue to be a magnet until we get a new fundamental catalyst to give us a technical breakout or a breakdown. We would be looing to trade a nickel on either side of 350 with tight stops. If we do get a technical breakdown with consecutive closes below 345, that would open the door to additional pressure towards the December contract lows of 335 ¼. On the flip side, the bulls want to see a conviction close above the 50-day moving average at 356-½. This is a very simple indicator but is one we have not seen the market close above since July.
Bias: Bias: Neutral
Resistance: 355-356 ½****, 369 ¼-370 ½***, 375****
Support: 345-348**, 334-335 ¼***, 323-325 ¼**
Yesterday's Close: January soybean futures closed 7 cents lower, trading in a range of 9 cents on the day. Funds were estimated sellers of 7,000 contracts.
Fundamentals: Soybean prices have been in free fall mode on the back of long liquidation form the funds. South American weather is the key catalyst on the radar for traders and it appears forecasts are looking for more wet conditions than previous expected for some areas of Argentina and Brazil. Outside of that, there has not been much new news across the wire. Export sales will be out tomorrow as usual, the bulls will want to see a better than expected number to help provide some relief into the Christmas weekend. January option expiration is this week, there are no strikes that stick out in terms of open interest; we will update you if that changes.
Technicals: The market has been slicing through technical support levels like a warm knife through butter, creating a technical graveyard. The bulls have a lot of work to do to repair the damaged chart; 967-968-¼ is the starting point, If the bulls can reclaim this pocket on a closing basis we could see continued buying towards the 100 and 200 day moving average which comes in from 975-977. A failure to break out opens the door for funds to not only liquidate long positions, but flip short and press prices towards 929-¼. Though we are over 50 cents off of the recent highs in just two weeks, the RSI has not broken below 30 which is the bench mark for “oversold.”
Resistance: 967-968 ¼****, 975 ½ -977 ¾***, 984 ¾-989**, 999-1004**
Support: 947 ½-949 ¾***, 922-929 ¼**, 915 ¼****
Yesterday's Close: March wheat futures closed 1-½ cents lower yesterday, trading in a range of 5 cents on the day. Funds were estimated sellers of 2,000 contracts.
Fundamentals: Wheat bulls have been searching for a strong fundamental catalyst to carry this market up out of the mud but have been struggling to do so. Global supply and poor demand have kept a lid on the market and will likely continue to do so. We saw some decent exports over the last week, but the bulls will want to see this become more of a trend and not just a good number followed by three poor numbers. We do have January option expiration this week, this could keep a lid on the chance of a short covering rally.
Tehcnicals: Lower highs and lower lows have been the trend over the past several months and there is no need to fight that. The only buying we have been recommending to clients is short covering. Flipping long might start to be a though on a break and new contract lows. Funds have one of their largest short positions on record so selling at these levels is not the most appealing either. We would wait for a short covering rally towards 438 to look at selling this market again. Sometimes the best trade, is no trade.
Resistance: 424 ¼**, 438 ¾***, 443-445¾ ****
Support: 399-402 ¾****, 392-394**, 381-383 ¾***