Corn and beans were firm in the overnight trade but have gave back some of that ground into the morning. Wheat is the weakest link and threatening a technical breakdown.
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Soybeans
Friday’s Recap
For the fifth consecutive session, Soybean futures ended higher, with the Jan contract settling Friday at 1030’2, up by 4’0. Across all maturities, a heavy 498,465 contracts changed hands, with 253,189 traded in the Jan maturity. Total open interest lost 12,866, or 1.48%, to end the session with 853,777 outstanding. The Jan maturity fell 3.93% (12,866) to finish at 344,278.
Technicals
November soybeans saw a rip higher following Friday’s WASDE report that showed a bigger yield drop than expected. Some of that optimism was offset by headlines regarding rumors of Robert Lighthizer coming back as a US Trade Representative. After the close those rumors were dismissed, but we wouldn’t be surprised to see them come back around. Now, back to the technicals. The chart looks pretty constructive. Upside resistance remains intact from 1049-1052 1/2. If you’ve been long the market you may consider reducing exposure, especially if we fail against Friday’s high of 1044. Our pivot pocket from 1018-1024 3/4 will be an will be first support to keep an eye on this week. A failure there could set prices back towards $10.00.
Technical Levels of Importance
Resistance: 1049-1052 1/2***, 1083 3/4-1087 1/2****
Pivot: 1018-1024 3/4
Support: 1006-1008 3/4***, 995 3/4-1002 1/2***
Popular Options
The Jan 940 put saw the most changing hands with 10,423 contracts done on Friday. Option open interest is largest for the March 1100 calls at 15,318, and the Jan 940 puts at 22,253.
Volatility Update
Implied Volatility settled sharply down on Friday with SVL losing 1.8, to end at a one week low of 19.11. Down by 0.0750% to a twelve year low, historical volatility (as measured by the 30-day) ended at 13.51%. The SVL Skew closed slightly higher, up by 0.7 to finish the session at -0.27.
Seasonal Tendencies Update
Below is a look at historical price averages for January soybean futures on a 5, 10, 15, 20, and 30 year time frames (Past performance is not necessarily indicative of future results).
Commitment of Traders Update
Friday’s Commitment of Traders report showed Funds were net buyers of roughly 4.5k contracts, which puts them net short 56.4k contracts.
Wheat
Friday’s Recap
Friday’s Wheat market was mixed with the Dec contract adding 1’0 to 572’4. Total volume came in at a one month high of 237,928, with the Dec maturity seeing a heavy 112,145 change hands. Across all maturities, open interest fell 7,710 (1.72%), with Dec down by 18,132, or 9.80%, to 166,874.
Technicals
December wheat futures are the weak link in the early morning trade, treading on the edge of support. We’ve had that support pocket outlined as 557 1/2-560 1/2. A break and close here could trigger technical selling and open the door for a pullback to 544 1/4. To avoid a technical breakdown and a counter seasonal rally, the Bulls really need to see consecutive closes above 582 3/4-585 1/2.
Technical Levels of Importance
Resistance: 596-600, 615-617 1/2***, 629 1/2-634**
Pivot: 582 3/4-585 1/2
Support: 557 1/2-560 1/2***, 544 1/4***
Popular Options
Friday’s option trading centered around the Dec 570 calls with 3,068 traded and the Dec 570 puts with volume of 2,587. Option open interest is highest for the Dec 600 calls at 7,047, and the Dec 550 puts at 7,857.
Volatility Update
As measured by WVL, implied volatility closed the session down, losing 0.58 to end at a one month low of 27.16. Historical volatility (30-day) ended the day at 22.28%, lower by 0.0963%, to a twelve year low. The WVL Skew closed the session moderately lower, down by 0.39 to finish the day at a one month low of 4.76.
Seasonal Tendencies Update
Below is a look at historical price averages for March wheat futures on a 5, 10, 15, 20, and 30 year time frames (Past performance is not necessarily indicative of future results).
Commitment of Traders Update
Friday’s Commitment of Traders report showed another week of little change on the CoT. Funds were net buyers of about 1.5k contracts which puts them net short 34.5k.
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