Commodity Market News Dec 14

Grain Market Technical Overview Dec 9
December 9, 2015
Grain Market Technical Overview Dec 16
December 16, 2015
Grain Market Technical Overview Dec 9
December 9, 2015
Grain Market Technical Overview Dec 16
December 16, 2015

Commodity Market News Dec 14

Summary

As farming technologies continue to get better grain production also increases with it. Last week China stated that its grain production for 2015 was 621 million tons. That makes for a 12th consecutive production record. This really comes at little surprise as this has been the norm as far as global production is concerned.

It is official, Mauricio Macri is the new Argentinian president as of Thursday December 10th. Now the grain community will wait to see how he intends on implementing his proposed tax/tariff cuts. Argentine producers are expected to increase production next year in reaction to his proposed market-friendly policies.

Corn

March 2016 Corn lost 6.25 (-1.64%) last week closing at 375.25. The December WASDE report showed the Corn market to be in a weaker situation than Soybeans. The 2015-2016 Corn ending stocks were raised to 1785 million bushels (MB), a 25 MB increase from the 1760 MB released from the November WASDE report. The Corn production number was left unchanged at 13.654 BB, making for the 3rd largest US crop ever!

Additionally, Brazil exported a record 4.9 million tons of Corn in November and early December estimates are calling for even bigger export numbers. CONAB raised their Brazilian Corn estimate to 82 million tons (up 0.9 million tons). Key resistance remains at the 382.50 to 384.25 are for the March futures contract.

Soybeans

January Soybean declined 35.25 (3.89%) cents last week returning all of the gains from the previous week. The picture on the weekly chart is a large snapback reversal. The March contract lost 34.25 cents (-3.78%). If there is follow through we could see a move back down to support near the 844.25 to 858 area sometime this week. Last week’s WASDE report did not release any changes of significance for the Soybean supply and demand picture. The 2015-2016 Soybean ending stocks were unchanged at 465 million bushels (MB). The 2015-2016 production number was also unchanged. Its estimate was 3.981 billion bushels (BB). If this production number holds, it will be a record crop size eclipsing the previous record at 3.968 BB that was made last year.

CONAB raised their Soybean forecast from 102 to 102.5 million tons. The NOPA Soybean crush data will be released on Tuesday, December 15th.

Wheat

March Wheat bucked the trend and actually gained 6 cents (1.24%) on the week. Australia reduced their Wheat crop production to 17 million tons (a drop of about ½ million tons) which was not much of a market mover. The balance sheet remained unchanged. A new cold front is scheduled to hit this week putting the southern plains on alert for possible damage. Weather forecasters have temperatures possibly dipping below 30 degrees and even below 20 degrees in some parts.

Crude Oil

China has reported that they have doubled their crude oil stockpiles and their strategic storage capacity over the past few years. Advanced in technology, oversupply and all-time record low price prices have created an environment for massive inventory stockpiling. Last week Crude traded below 36.00. The last time it reached that level was six years ago. For now there does not appear to be any realistic short as production curbing in the short term horizon.

March 2016 Corn

March Corn fell from our resistance band last week then gathered itself at the top end of our support band near 370. Clearing either side of our support/resistance band would be the 1st indication of potential trend direction. The WASDE report was bearish on Corn but it has been defying the odds a bit the past few trading days. It is approaching resistance again as the week begins but we believe that it will have a tough time getting past 385. This contract had dropped from being overbought last week on Monday and is returning to an overbought position prior to reaching oversold. Our cycles indicate continued sideways to downward movement over the next 6-8 weeks.

December 2016 Corn

Resistance for the December new crop contract remains at the 406 to 412 area. Prices made a high of 403.50 last week then dropped. From there it has essentially consolidated near 395.75 support. It has some strength in trading early in the week but like the March contract it is close to being over sold and should sell off after an approach to 407 or so.

January 2016 Soybean

Last week we alerted you to the January Beans move to volatility based resistance (red arrow). We then suggested that we could find support at our geometric circle. Price declined to that circle through Friday of last week and we appear to have found some support this morning at the circle. Today’s low happens to coincide with a 61.8% retracement. If prices are able to hold here we might be sitting at the mid-December low that we were looking for occurring about a week earlier than anticipated. If price are able to close above 885 this week, we are looking for a price objective of about 926 to 930. We have included last week’s chart for reference.
 

November 2016 Soybean

After hitting pivot 12 on the chart below, the November Beans fell and have been hovering near the 890 mark since. This forward contract is going to be a less volatile than the nearby contract so it will probably remain in a tight trading range through the holidays.

July 2016 Wheat

July Wheat was able to find some persistence in its advance. We have great resistance at the 505-510. It is currently overbought but may not decline until it reaches 510. Volatility is narrowing. When it is able to break out of its compressed range we could be looking at a big move ahead.

January 2016 Crude Oil

Crude Oil made a low of 34.53 during intraday trading today but has recovered in a strong fashion. As of the writing of this newsletter it has climbed back above 36. We believe that 37.50 is a key level for this contract but we are not interested in bottom fishing. We want to see clear indication of trend reversal before we would consider going long this market. Global supply factors continue to point toward more weakness so any bounce right now would be purely based on a technical bounce.

February 2016 Live Cattle

Live Cattle made a low of 122.375 on Thursday December 10th which was very much in line with our projected 122.850 support level. Prices continue to hold above that level but the chart continue to look weak. If this contract is able to close above 128.500 this week that could be a sign that the selling may ease.