Funds have been pounding the short side of corn for the last several months, Friday’s USDA report did little to add more fuel to the fire which spurred some moderate short covering into the close. The soybean report was more bearish than neutral, but optimism around the January 15th Phase-1 signing kept a floor in prices. The signing of the “Phase-1 trade deal” comes off as theatrical which could lead to a “buy the rumor, sell the news” type of reaction. There is also the chance that it doesn’t get signed and instead gets kicked down the road to a later date.
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March corn futures finished Friday’s session in positive territory, thanks to a “blah” report that lead to technical short covering. All last week we talked about how the bulls MUST defend 377-380 on a closing basis, this pocket represents previous contract lows in May, a gap from December 12th, along with other previously important price points. This significant technical support coupled with a neutral USDA report sparked a mild round of short covering, taking us back to our pivot area and 100 day moving average, 385-386 ½. The bulls want to see consecutive closes above here, but the more important resistance pocket comes in from 390 ½-392. A conviction close above here would likely trigger a bigger wave of technical short covering. Our bias going into this week’s trade is Bullish/Neutral, closes above resistance would change that to outright Bullish.
March soybean futures dipped lower on the release of the report but managed to hold first support and finish the session in positive territory. We listed first support as 933 ¾-937 ¼, this pocket represents several previously important price/volume points from the last month. We were hoping to see a break below here to be able to by March beans in the mid-920’s. We didn’t get that break and don’t see much value in a speculative buy or sell right here, keeping our bias to start the week at Neutral.
Check out tomorrow's Grain Express for the full fundamental & technical breakdown!
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