Corn Futures (March)
Fundamentals: March corn futures rallied hard on Friday, erasing all of Thursday’s losses and then some. Rumors that China secured multiple cargoes of US corn helped offer support, but there hasn’t been confirmation on that yet. We believe technicals and money-flow are leading catalysts near term. Options expiration on Friday could keep the market pinned near term. Friday’s Commitment of Traders report showed that funds bought 6,367 contracts through January 14th, trimming their net short position to 79,140 contracts.
Technicals: The market was technically sound last week, testing and holding the top and bottom ends of resistance and support which we defined as 390 ½-392 and 377-381. In our Weekend Ag Update, we talked about reducing longs and even looking to the short side on Friday, against technical resistance. 383-385 is the near-term target. We believe that Friday’s option expiration will keep us range-bound this week, barring any groundbreaking news.
Fundamentals: Last week’s signing of Phase-1 was a classic buy the rumor, sell the news response. The substance in the trade deal remains suspect in our eyes. China has stated several times that imports will be based on market conditions, ie: supply/demand and price (same as before). Soybeans are working back towards the low end of the range in the early morning trade as the life-threatening Coronavirus spreads in China. Friday’s Commitment of Traders showed funds bought 6,036 contracts through January 14th, putting them net long 3,185 contracts.
Technicals: The market tested and held our technical support pocket perfectly last week, a pocket that we had defined as 920-922 ¾. In our weekend report, we talked about this being a spot to reduce short exposure. If you want to be on the long side, try to remain patient for a dip down to 912-916. This pocket represents the gap from December 12th and 13th.
Previous Session Bias: Bearish/Neutral
Resistance: 950 ½-955***, 968 ½-970****
Pivot: 933 ¾-937 ¼
Support: 920-922 ¾***, 912-916****
Chicago Wheat (March)
Fundamentals: Chicago wheat futures managed to rally back on Friday as funds defend their net long position. Friday’s Commitment of Traders report showed funds have a net long position of 29,787 contracts. Funds are net-long 7,935 Kansas City wheat contracts.
Technicals: Wheat has been resilient, and the chart remains constructive, but we are still leaning on the short side, from a risk/reward perspective. 575-578 ¾ continues to be a resistance pocket we like selling into but keeping a tight leash on it above that pocket.