Can Soybeans Breakout?
Nov 27, 2017
Last Weeks Close: March corn futures traded ¾ of a cent lower last week after trading in a range of 5 ½ cents (basically Fridays session). Funds were estimated to have been sellers of 4,000 contracts on Fridays session. Due to the Thanksgiving holiday, the weekly commitment of trader’s report was delayed until today.
Fundamentals: With December options off of the board we have moved our focus out to the March contract. The market has been and will continue to look towards South America for new fundamentals to move the market. Argentina is estimated to be about half way done with their planting which means short term weather changes could affect price action. There has been concerns that Argentina could turn drier over the coming months which could help provide support to the market.
Technicals: The market has been in a trend of lower highs and lower lows over the past three months which will keep the bears in control until we see a close above technical resistance. First technical resistance comes in at 361, this represents the 50-day moving average, an indicator we have not been able to stabilize above since July. Consecutive closes above could encourage short covering from the funds who have a near record net short position (we will get an updated look at where the funds stand in todays Commitment of Traders report). On the support side of things, 348 ¾ is the line in the sand we are watching. This held as support on the 16th and 17th, a break and close below could open the door to another leg lower.
Resistance: 361***, 367-369 ¼**, 373 ½-375****
Support: 348 ¾**, 334-335 ½***, 323-325 ¼**
Last Weeks Close: January soybeans closed ½ a cent higher on the week, trading in a range of 16 ¾ cents. Funds were estimated to have been sellers of 3,500 contracts on Fridays abbreviated session. Due to the Thanksgiving holiday, the weekly Commitment of Traders report will be released today.
Fundamentals: Attention of market participants has shifted towards developments in South America, particularly in Brazil and Argentina. Argentina is estimated to be 34% complete with their planting. Talks of La Nina developing over the next few months could mean problems and therefore premium in the market, this will need to be monitored closely going forward. As of this past weekend, there was estimated to be a 70% chance. Brazil is estimated to be 84% planted, this is basically on pace with last years 83% for the same time.
Technicals: The market has made a strong recovery over the past two weeks and is right back at the top end of the recent range and our resistance pocket which comes in from 999-1004 ¾. If the bulls can achieve a close above, we could see funds extend their net long position and press prices towards 1021 ½. On the support side of things, we see 983 ½-984 ½, this pocket represents the 50 and 100 day moving average, along with the 50% retracement from the June lows to the July highs. If the market fails to breakout and breaks down below first support, we could see long liquidation back towards 968 ¼.
Resistance: 999-1004 ¾***, 1014**, 1021 ½****
Support: 983 ½-984 ½***, 968 ¼****, 957-963 ¼****
Last Weeks Close: During the shortened week, March wheat futures traded in a 14-cent range with prices ending the week 10 cents cheaper than the previous. Funds were estimated to have been sellers of 4,500 contracts on Friday. Due to the Thanksgiving holiday, the weekly Commitment of Traders report will be released today.
Fundamentals: Fundamentals have not changed much over the past few weeks which keeps the bears in control of news. Ample global supply and lack of demand continues to be a burden on bulls in the market. We will need to start seeing a fundamental shift in the supply and demand functions, we do not see that being an imminent threat to the shorts. We will be watching the USD closely, if the USD does fail to gain momentum we could see that help out exports, this is a reach for a silver lining.
Technicals: The market has been making lower highs and lower lows for several months now which keeps the bears in control. First technical resistance comes in from 445-447. A close above could encourage short covering towards the 50-day moving average at 452 ¾, an indicator we have not closed above since July. We feel these are levels you will want to sell against with a limited risk strategy just above. On the support side of things, it is tough to navigate at contract lows, but we would not be surprised to see the market make a run towards the $3 handle.
Resistance: 445-447****, 452 ¾**, 478-479****
Support: 422 ½**, 412 ¾***, 399-402 ¾****, 390-392 ¼**
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