Update on fundamentals and technicals of grain markets from Oliver Sloup.
Corn (ZCH)
Fundamentals: March corn futures were little changed yesterday, with little new news hitting the wires. Due to the Holiday on Monday, export sales are pushed back to tomorrow morning. As noted for the last week, we believe option expiration will continue to keep a lid on the market at 390, where majority of the open interest is.
Technicals: We wish we had something new to say, but the market is sideways, which leaves levels and our overall thesis intact. As mentioned in the fundamental section, we believe option expiration will keep a lid on the market going into tomorrow. However, once we get through option expiration, we feel we could see the market chew through resistance.
Soybeans (ZSH)
Fundamentals: Soybeans are continuing to bleed lower on the lack of new bullish headlines. Due to the Holiday on Monday, export sales are pushed back to tomorrow morning. Weather in South America has been mostly friendly which has added a wet towel to the market.
Technicals: Yesterday’s slow grind lower was not a good sign for the bull camp and that has bled into spillover weakness in the overnight/early morning trade; the $9.12 to $9.16 level represents the gap from Dec. 12 and 13, this will be the pivot pocket the bulls need to get back out above today.
Chicago Wheat (ZWH)
Fundamentals: Chicago wheat futures had a wicked reversal yesterday and if you’re looking for a fundamental reason for it you can stop, because you’re not going to find one. Due to the Holiday on Monday, export sales are pushed back to tomorrow morning. We have been leaning on the short side of Chicago wheat and proven to be wrong as of late, but still believe we will see process subside from these levels.
Technicals: Yesterday’s reversal was bearish in nature, but today’s price action will confirm or reject it. If the bears can find follow through on the open, they take it lower.
Kansas City Wheat (March)
Technicals: Kansas City wheat futures posted a double top against last week’s high and reversed into the afternoon session. That weakness has spilled over into the early morning trade with the market threatening our pivot.
Cotton (March)
Technicals: March cotton futures saw a massive reversal yesterday, trading in a range 2.59. The volatility is shaking out weak hands on both sides, which keeps us happily neutral for the time being; 70.00-70.50 is the battleground area.
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