Good Morning: Yesterday the market saw a wild session with better than expected early strength reversed due to the pounding in crude, cotton and sugar. The latter two was due to reports from ICE stating they will curb long speculation. The report says Cotton is limited to long 300 contracts without proving “need”. No further information as to what justifies need but I’d imagine they are pushing funds out. This is not a good idea…sounds a lot like what China did with their bean oil markets. I thought we had a free market over here? Outside of that impact the trade was a mess with crude chopping wildly as well. Limited fresh fundamental news and limited participation due to Chinese new year left many searching for answers. Bull spreads won on a down day pointing to further bullish momentum in the future. KC held ground against CHI but Minni lost due to strong late covering seen in Chicago. Look for both to widen again next week maintaining the pattern.
In options the market saw two-sided activity with many positions in March closed or rolled forward. Theta is a major issue for March length heading into the weekend. Expiration is on 2/18.
Fundamentals were quiet as the market waits for damage assessments from Australia and the US HRW plains. Argentine weather is wet but no totals are expected until Monday though talk has smaller totals than previously thought with only .25-.75″ The overnight session was choppy with light volume traded. No fresh news offers little to trade on today.
Macros are moderately mixed offering little momentum but with OI gaining every day I have to look at the upside as the risk. A drying forecast in Arg over the next 20 days, a report stating China will need to import 9-11 MMT of corn and declining HRW conditions support bulls. Charts are supportive as well in spite of indicators moving to the top end of the range. Overall heading into the weekend look for a choppy directionless trade with many eyes on Cotton, sugar, crude, the USD and regulatory bodies for talk of curbing speculation.
Beans are called Mixed again to start with the contract high at 1452.50 still within reach if the market gets bulled up today. Corn is called Mixed to start following a failure to get above the contract high at 674.50 yesterday. Indicators are showing signs of weakness at the upper end of the range. Wheat is called Mixed looking to hold ground after yesterday’s new contract high at 872 ¾. Indicators are mixed at the upper end of the range. Meal is called 1-2 dollars cheaper to open with Bean oil looking to open flat.