The old adage of needing to feed a bull everyday appears applicable with today’s price action. Wheat was impacted by lower than expected offers to Egypt in its tender for early March arrival and shook off the fear of winter kill in those areas in the Heartland which will slip to well under 10 below Fahrenheit without snow cover. It appears that the market is still waiting for fresh news and Chicago March finds good support as it approaches 510 and finds less than stellar buying interest when it rallies over 524. Basis levels still suggest that quality stocks are getting fewer to be found and this may have an impact on spreads when we are in deliveries in March. The next big event is the February 8 USDA report day when we anticipate seeding, stocks, and final production to be issued as well as supply/demand projections. Traders expect a mixed bag for wheat with lighter winter wheat seeding and larger carry over. Wheat/Corn appears to be at major resistance at $1.50 yet, until assured that the new crop wheat is in decent shape, late March/April, the likelihood for a collapse in wheat is light. We’ll need a very bearish surprise in the deeding report to initiate a collapse. Volatility typically increases when we break dormancy as we get to the real winterkill season of thawing, refreezing, heaving and high winds. We still sense that it will be more difficult to be bearish through the report and deliveries than bullish. Yet, we’ll need fresh news such as weather issues to spark buying enthusiasm to generate a move over 550. A bad day for bulls today yet we’re still in limbo and wheat typically rallies faster than it breaks.
Corn is still liking the 376-380 area in the nearby contract. Spreads remain stagnant to weakening and basis levels still suggest that delivery is still the best sale on the March contract. The trade has been talking that the government figures may be lighter than previous reports with final production and carry over. Yet, surprises by the USDA do occur and short covering may stabilize the spreads into the report.
Beans are still performing well considering the oncoming South American harvest. Traders are anticipating a slight reduction in South American production and a small decrease in domestic carryover with a smaller final production figure. Spreads appear to be stagnant to weakening as traders are talking about an increase in on farm selling as we approach warmer weather. SH appears to be content vibrating around 912.
The trade appears to be wore out with government and central bank involvement. The Federal Reserve, Brexit, Yellow Vests, Chinese trade deals and government shut downs are difficult to predict. It feels as though end users have comfortably covered needs for the next few months and are awaiting these events to pass before adding to needs.
The information contained on this site is the opinion of the writer and obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in current market prices.
Join
My Mailing List
Steve Bruce
Walsh Trading
312 985 0156
888 391 7894 toll free
312 256 0109 fax
sbruce@walshtrading.com
www.walshtrading.com
Walsh Trading
53 W Jackson Suite 750
Chicago, Il 60604
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the
Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for
all investors. Therefore, individuals should carefully consider their financial
condition in deciding whether to trade. Option traders should be aware that the
exercise of a long option will result in a futures position. The valuation of
futures and options may fluctuate, and as a result, clients may lose more than
their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF
FUTURE RESULTS.
All information, communications, publications, and reports, including this
specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be
construed as a solicitation for entering into a derivatives transaction. WTI
does not distribute research reports, employ research analysts, or maintain a
research department as defined in CFTC Regulation 1.71.