Please join me every Thursday for a free grain webinar at 3pm Central. We discuss supply, demand, weather, and the charts. Sign Up Now
Commentary
The January USDA reports showed fundamental shifts that sparked renewed corn and soybean market strength since the January 10th report. While the corn market had seemingly been pricing in supportive data, strong gains indicated USDA’s changes were more bullish than anticipated as deferred old crop contracts eye 5.00 per bushel. Ending stocks have been revised lower by 380 million bushels to 1.54 billion in the last two WASDE reports. Bullish versus all expectations. It simply raises more questions than answers moving forward as the balance sheet tightens. We are months away from meaningful South American harvests so near-term demand and more importantly weather in SA is paramount for market direction. Corn moved higher on two fronts today in my opinion. First and most important were forecasts showing a decidedly dryer shift in Argentina’s 10-day forecast overnight and again in the midday models (20% decline in moisture). Hot and dry has been the recent theme in Southern Brazil and most of Argentina lately where crop conditions are on the decline. The forecasts absent of key rains most likely added enough uncertainty for funds to add to bullish positions ahead of the 3-day weekend. Second factor was political. Per multiple media outlets, recent communications between soon to be President Trump and Xi Jinping were seen as a positive first step towards working together. Trump called this morning’s call “a very good one” and Xi said that he and Trump both hoped for a positive start to U.S. China relations. Trump went on to say, “It is my expectation that we will solve many problems together and starting immediately.” This was possibly seen as perhaps there’s less of a chance of enhanced tariffs being announced short after Trump takes office on Monday. Toned down rhetoric between the two leaders is seen for now as a positive regarding AG exports. A close over the 100-week moving average at 480 and the 5 percent higher on year threshold at 482 opens the door for higher prices in my opinion technically. Should weather keep hot and dry look for March corn to potentially test 494 and 503/04, the next key resistances. If the market blows past that level, the gap from last year at 5.25 could be tested. (see arrow on chart) Support is down at the 100 at 4.80 and then the Bollinger band at 475 into next week. A break below both and the market could retest 462 and then 458, which is unchanged on year. No new trade recommendations as of yet, Too many variables into a 3-day weekend.
Trade Ideas
Futures-N/A
Options-N/A
Risk/Reward
Futures-N/A
Options-N/A
If you would like to receive more information on the commodity markets, please use the link to join our email list Sign Up Now
Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
312 957 8103
888 391 7894 toll free
312 256 0109 fax
Walsh Trading
311 S Wacker Drive Suite 540
Chicago, Il 60606
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. The information contained on this site is the opinion of the writer or was 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 market prices.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.