Wintry weather and China trade expectations are moving grain markets, reports Oliver Sloup.
Corn (ZCZ)
Fundamentals: December corn futures managed to trade to their highest level in over a week as wintery weather moves through the Midwest and spurs some short covering from the funds. That cold weather looks to persist through the weekend for some areas, possibly ending the growing season for late planted corn. Yesterday’s weekly ethanol report showed production increased 8,000 barrels per day to 1,004,000 barrels-per-day (bpd). Export sales this morning came in at 549,100 metric tons, up 29% from the four-week average. The bulls desperately need to see the demand pick up in order to stage a more meaningful rally.
Technicals: The market worked into our first resistance pocket yesterday and ran out of gas, we have had that defined as $3.90-$3.92 ¾. The failure has led to a weaker overnight/early morning trade, but we remain optimistic and are taking the light volume trade with a grain of salt.
Soybeans (ZSF)
Fundamentals: January soybean futures were a laggard yesterday as optimism around a phase-1 trade deal diminished after the Summit in Chile was cancelled, due to protests in Santiago. With that said, was anyone really expecting anything substantial from a would be “phase-1” deal? We continue to be very hesitant on trade optimism until we get closer to the election, nearly a year away. As I’m writing this, there are reports that Beijing could ax tariffs on U.S. farm products to boost exports. This is a recycled headline but should not be completely ignored. Export sales this morning came in at 943,600 metric tons, down 39% from the four-week average.
Technicals: January soybeans tested our technical support pocket in the overnight trade, we have had that defined as $9.21-$9.28 ½. We have noted that we believe this is a buying opportunity on the first test, if you’re bullish.
Chicago Wheat (ZWZ)
Fundamentals: December wheat futures continue to trickle lower as market participants seem a little concerned that the recent rally may price the U.S. out of the market. With that said, exports were healthy this morning, coming in at 493,800 metric tons. This is up 31% from the four-week average. The U.S. Dollar Index is making a run back at the recent lows, a further breakdown here could help support prices.
Technicals: The market has officially moved into our four-star support pocket.
Kansas City Wheat (December)
Technicals: KC Wheat has been grinding lower but has been defending our pivot pocket from $4.15 ½-$4.20. If the market fails to hold here, we could see a small leg lower towards $4.09. This pocket represents the 50-day moving average and trendline support from the contract lows.
Cotton (December)
Fundamentals: Export sales this morning came in at 108,100 rb, this was down 23% from last week and down 39% from the four-week average. The bulls need to see this be a one-off number. optimism around a phase-1 trade deal diminished after the Summit in Chile was cancelled, due to protests in Santiago. With that said, was anyone really expecting anything substantial from a would be “phase-1” deal? We continue to be very hesitant on trade optimism until we get closer to the election, nearly a year away. As I’m writing this, there are reports that Beijing could ax tariffs on U.S. farm products to boost exports. This is a recycled headline but should not be completely ignored.
Technicals: December cotton futures managed to make a new closing high but failed to close above technical resistance.
