Daily Grain / Hogs Marketing Outlook Written by: Jim Gerlach 12/21/2016

Transcription

1 Daily Grain / Hogs Marketing Outlook Written by: Jim Gerlach 12/21/2016 Early Call 8:45am EST: Corn down $.01, soybeans up $.05, wheat down $.02. We've reached Hump Day of Christmas Week and grains remain relatively quiet. Soybeans regained some of Tuesday's sharp sell-off, while corn and wheat barely moved. Outside markets were mostly higher with both gold and crude oil showing small gains. The U.S. dollar index was quietly lower, adding light support to commodities in general. The star of Wednesday's show could be the DJIA as overnight gains by its futures market indicates a strong test of 20,000 before the day is through. Grains: Soybean futures dropped to a one-month low, pressured by crop-friendly rains in Argentina, while a stronger dollar weighed broadly on agricultural commodities. Prices for soybeans fell to the lowest level since Nov. 18 as recent rainfall and forecasts for ongoing precipitation eased worries over production problems in that country. Argentina is slated to get a half-inch to 2 inches of rain this week, analysts said. Weaker prices for soybean meal and soyoil also weighed on the oilseed market, as did speculation that U.S. farmers will ramp up soybean plantings next spring. A firmer U.S. dollar and end-of-the-year selling by commodity funds further pressured the market. Soybean futures for January slid $.16 1/4, or 1.6%, to $ /4. Corn and wheat prices moved lower for a second-consecutive session, buffeted by the firmer dollar, which hit a fresh 14-year high overnight. An ascendant dollar acts as a weight on agricultural markets because it makes U.S. farm goods less affordable for foreign buyers. Meanwhile, good rains in Argentina are also expected to improve the health of that country's corn crop, boosting the outlook for production at a time when world corn inventories are already at all-time highs. March corn futures declined $.03, or 0.9%, to $3.50 1/4. The wheat market suffered due to forecasts for warmer U.S. temperatures over the next two weeks, although losses were stemmed by a colder outlook for January. Bitterly cold temperatures can damage wheat crops that aren't sufficiently insulated from the snow. CBOT March wheat futures shed $.01 3/4, or 0.4%, to $4.03 1/4. Showers into early Friday and again this weekend will favor central Argentina, easing most dry areas by Monday. An additional shower chance arrives in the day period 1

2 and helps to keep the dry areas of Argentina limited. Temps were in the low to mid 90s yesterday and continue today and return on Sunday, but otherwise limited heat risks occur. Brazil saw showers in central/center-west Brazil in the past day, with drying limited to the northeastern 10-15% of the belt over the next two weeks. Drier spots in southern Brazil ease over the next week, with minor delays to the very early harvest in the center-west. While not particularly wet, additional rain chances in the day period occur for Argentina, with dryness concerns limited to northeastern Brazil. Rain in Argentina was largely the cause of weakness in corn and soybeans yesterday, but Drew Lerner of World Weather, Inc. notes that, "it is still debatable how much improvement in subsoil moisture will result and that will be the key in determining crop stress potentials in January." Said differently, there is a long way to go before this crop is in the bin. Most will remember that last year s weather induced crop losses in Brazil and Argentina did not hit the futures market until we hit early March (or some days from now). However, the latest South American weather forecast features additional rain chances for Argentina and southern Brazil for another 6-9 days before the return of a drier pattern. Cumulative rainfall totals into Dec 29th look to range from Noted crop scout Dr. Michael Cordinnier upped his Brazilian soy crop 2mmt to 103.2mmt (USDA 102mmt), taking the 5-nation South American crop to 174.2mmt, up 8.7mmt vs. last year, while leaving his 5-nation corn crop unchanged at 125.3mmt, up 28.1mmt vs. last year. RJO s weekly Brazil crop roundup pegs the 2017 corn/soybean crops at 87mmt/ mmt, respectively vs. the USDA s 86.5mmt/102mmt forecasts. Row crops are in great shape, although early Mato Grosso dryness may trim the soybean crop slightly while RGDS still needs additional rain for pollinating corn (expected within the next week). Port loading efficiencies have improved over a year ago, although planned roofs over some loaders to allow discharge during rains will not be completed for the 2017 loading season. The trade expects a resumption of aggressive corn exports following the safrina corn harvest, but only if yields rebound considerably from drought reduced levels last year. Brazil corn planted area is unchanged to up 1% vs. last year. A 6% swing in the Brazilian real during Dec alone reflects both dollar gains and internal strife between judicial and legislative branches. Well capitalized farmers are unlikely to up new crop selling until harvest. The weekly Argentina crop roundup pegs 2017 corn/soybean production at 34mmt/53mmt respectively vs. the USDA forecasts of 36.5mmt/57mmt. Soy planting is near 67%, tracking 12% behind average, while corn seeding at 60% is being helped along by recent rains. They estimate that 20% of total crop area (especially Cordoba) is still dry, although more rains are coming mid-week and weekend (Ed Note: since when was dryness in the spring when crops are just 60% planted a problem?) Very early corn in northern areas is pollinating under favorable 2

3 conditions. Mounting social issues fueled in part by high inflation suggests normal to above normal strike activity at harvest. The commentator believes that Chicago markets over-reacting on the downside to rains so far as more frequent and timely rains are needed to attain trend row crop yield potential. Grains eroded in sympathy with soybeans as traders are watching the 50-day moving average for March corn/soybeans at $3.50/$10.09, which yesterday were violated for the first time since Oct 14th. If prices close under these levels on Friday, we could see the 120,000 of longs by managed funds begin to bail. Money is clearly moving out of fixed income and into other, inflation-sensitive investments like stocks and commodities. Trim Tabs Investment Research said on Monday that between November 8 and December 15 (5 weeks), almost $98 BILLION has flowed into ETF s (exchange traded funds) for U.S. stocks. This is about 1.5 times the $61.5 billion that flowed in for ALL of Jan options expire Friday and could act like a magnet, with the largest corn/soy/wheat open interest at $3.60/$10.00/$4.00 strikes. There are an estimated 14,000 $10.00 puts and another 9,000 $9.80 puts, which should support the market through the end of the week. Finally, there s talk that the U.S. soybean buying pace is finally starting to slow with firming South American soy basis and the near completion of Chinese Jan/Feb soy import requirements. China reportedly has 95% covered for Jan, 75% for Feb and 25-50% for March. Looking ahead to the Jan 12 th crop report, traders suspect the 2016 U.S. soybean crop will grow and that 1 st quarter corn feed demand is likely overstated. The Nov to Jan soybean crop has risen 7 of last 9 years, while corn is closer to a coin-flip, declining in 6 of the last 10 years. However, the trade has a propensity to overstate Dec 1 soy stocks in 7 of the last 8 years, while corn stocks have shown no bias. The trade has done a pretty poor job estimating Dec 1 corn stocks, off 250mb or more in 6 of the last 10 years, evenly spilt between higher or lower. When you consider the USDA s 520mb projected increase in feed demand, combined with a very warm 1 st quarter that likely led to lower than normal feeding, the risk in corn appears to be an understatement by the trade of Dec 1 corn stocks. While soybean stocks could come in below trade expectations, we must remember that the 480mb carryout estimate is more than double the 10-year average of 198mb so a 40-50mb decrease in stocks wouldn t have a significant impact on prices unless accompanied by problems in South America. On the demand front, the USDA announced a 132,000mt sale of 2016/17 soybeans to China via their daily reporting system. Asian palm oil price futures rebounded from losses to end higher Wednesday, supported by tight supplies. Investors are expecting a further fall in output, which will keep the prices steady. Further, a weaker ringgit, which makes palm oil cheaper for holders of foreign currencies, also lent support to prices. 3

4 Indonesian palm oil exports probably rose to the highest level in 13 months in November as some buyers replenished stockpiles. Exports of palm and kernels oils increased 5.4% from October to 2.54mmt, according to the median of eight estimates from analysts, traders, refiners and plantation executives compiled by Bloomberg. That s the highest since October 2015, data from the Indonesian Palm Oil Association showed. The association, known as Gapki, may release November data in January. China s Ministry of Commerce expects soybean inbound shipments to fall 86.2% on year in Jan, expects Jan soybean oil inbound shipments to fall 65.8% and expects palm oil inbound shipments to fall 96% compared to last year. The average U.S. ethanol price in 2016 was at $1.55, the lowest since Ethanol exports have been the strongest in several years as a result, with more than 300mb of corn exported in liquid form this year. China s sorghum imports may fall after Jan. as rising U.S. prices coupled with depreciation of local currency make imports expensive, China National Grain and Oils Information Center said Wednesday. Russia corn exports were running at a record pace in the first three months of the marketing year, according to UkrAgroConsult. In a report published Tuesday, the research firm put its preliminary exports estimate for corn exports in September, October and November at an all-time-high 1.8mmt, up 60% from the same period in Exports came to 0.8mmt in November, the highest total ever for a single month, last month, it added. The surge in shipments from Russia has been enabled by a run of bumper harvests. UkrAgroConsult estimates that Russia has over 5mmt of corn available for export this marketing year, up by between 9% and 12% year-over-year. Reuters reports South Korea has culled more than 20 million birds since the H5N6 virus was noted on November 18. Three confirmed cases in mainland China have farmers ramping up sterilization practices, vaccines, and vitamin intake. Hong Kong confirmed its first human bird flu infection of the season Tuesday. Soymeal export potential is threatened if enough consuming animals are lost. Hogs: Cash hogs are called steady to $.50 lower as pork processors and producers continue to labor through a cold snap that's slowed business. Pre-holiday demand for ready barrows and gilts has turned rather flat, obviously a function of slowing chain speed over the next several days. Friday's kill should be cut by 100,000 head or more, and Saturday is expected to be virtually dark. Peoria is called steady after closing steady at $27.00 yesterday. The national bid lost $.41 to close at $52.66 while the IA/MN bid lost $1.05 to close at $ Cut out values rose $.39 to close at $78.98, with movement decent at 321 loads. Wholesale pork demand is performing impressively following last week's tallest ever mountain of production, supported yesterday by better demand for butts, picnics, ribs and bellies. Though belly demand is taking up some of the slack, ham prices should continue to struggle and significantly erode through the end 4

5 of the week. Weekly kill is unchanged vs. a year ago. Estimated packer margins were $51.02/head for non-integrators and $36.51/head for integrators vs. $47.99 and $34.95 the previous day. February lean hogs fell sharply Tuesday as the market succumbed to overextended and overbought technical conditions. The trend is positive, but Tuesday's action may have marked out a short-term top at $66.42 as the market is ripe for a retrenchment phase. On the downside, support lies at $62.42 and then $60.87, the Dec. 15 low. Lean hogs have posted a significant rally phase in recent months, climbing from a low at $47.52 in October to Tuesday's high at $ The nine-day relative strength index turned down from an extreme overbought reading at 85% on Monday. Momentum could have farther to fall. On the upside, a bullish chart objective lies at the July high of $67.62, but a period of consolidation and correction is likely before the bulls stage a fresh rally attempt. Hog futures sank Tuesday as persistent concerns over meatpackers' demand for pork caught up with the market. Cattle futures also declined. Lean hog contracts expiring in February fell 3.2%, or 2.1 cents, to settle at 64 cents a pound, driven lower by concerns that pork processors had acquired enough animals to stay supplied as the holiday rush for hams, loins and other pork products subsides. A USDA report also looms Friday, which will give traders an idea of the current hog herd and producers' aims for managing it. Some analysts anticipate it will show that hog farmers are keeping their breeding herds the same size or even expanding them slightly, which could continue the glut of pork headed to U.S. slaughterhouses and meat cases. Pork processors, buoyed by strong domestic and foreign demand and emboldened by fat profit margins, have bought up massive numbers of hogs since mid-november, which had helped to drive hog futures prices nearly 30% higher from the beginning of December through Monday's close. But analysts warned that as holiday buying slowed and meatpackers' inventories built, hog futures could lose their momentum, and weakening cash prices paid for animals across Midwestern terminal markets this week suggested the market was cooling. We're hearing now with the shortened kill week that packers are pretty well booked with hogs and they don't really need any more, even though the margins are good, which could lead to some sort of meaningful correction after a tremendous move up. Tuesday's decline, which at one point neared the Chicago Mercantile Exchange's daily limit for a downward move in prices, more than erased the prior-session gains for February hog futures, though prices still remain 12% higher than they were one week ago. Much of the recent rally, traders said, has been fueled by investment funds buying the contracts, while producers have taken up defensive positions in case hog futures rapidly dive. Live cattle futures also declined, edging down 0.4% to settle at $1.155 a pound as wellsupplied meatpackers weren't expected to bid up cattle prices after animals changed 5

6 hands late last week around $1.12 a pound, below what some producers were hoping to get. Cattle futures have been strong this month, rising about 4.2% since the end of November, and analysts anticipate consumers' optimism around the U.S. economy to translate to more steaks and burgers in the months ahead. Traders, however, are awaiting data to come from the USDA Friday detailing the domestic cattle supply, particularly the pace at which feedlots have been stocking up on animals in recent months. Some analysts predict that after relatively slow placements of cattle in September and October that there were many animals on hand in November, which could put more beef in processors' pipelines. The Chicago Mercantile Exchange reports the adjustment in the retail price of pork has lagged the broader correction in pork prices at wholesale. "The average pork price in November was reported at $3.62 per pound, 3.2% lower than the previous month and 7.5% lower than a year ago," the CME said. "The month to month change in pork prices was the largest since December 2010 and reflects the sharp decline in pork values during the month of October." On the positive side, the low prices in October allowed retailers to significantly adjust selling prices and allow the market to absorb the big increase in weekly pork production. "The price of bacon and pork chops at retail was down 5% from the previous month in October, while ham values were down 3%," the CME said. "As with ground beef, the decline in the price of such retail staples as pork chops has significantly lagged the decline in wholesale prices." Price reductions often will lag when the retailer does not expect the lower price to generate higher sales and in the CME's view, getting U.S. consumers to buy more pork chops has been an upward climb in recent months. "It seems the demand has shifted towards items that have more fat, and thus more flavor, including bacon, sausages and pork shoulder," CME analysts said. "The price of pork loins at retail is currently 40% lower than the average price for loins in 2011 (34% if we compare to November 2011). The price of pork chops at retail, however, is about the same Wednesday as it was five years ago." Pre-report estimates for Friday s 12pm EST Quarterly Hogs and Pigs report show a range of expectations for all hogs and pigs slightly wider than normal, and stems from a wider expected range on hogs kept for marketing. Expectations on hogs kept for marketing show year-over-year increases in all weight categories, with slightly larger increases in the two heaviest breakouts. While average estimates show we are slightly more front loaded on heavy hogs, these average numbers still appear to be manageable for the industry. Additionally, this Quarterly Hogs and Pigs report is as of December 1st, and we have already seen some of these heavy hogs come through the packing plants in daily slaughter numbers for December. Average estimates on hogs kept for breeding shows very limited breeding herd growth, and the range on these estimates is fairly narrow. September to November farrowings are expected to be almost even with 6

7 year ago numbers, however pigs per litter is expected to increase 1.1% year-over-year. This growth rate on pigs per litter explains the 1.5% yearover-year increase estimate on the September to November pig crop. Looking out further into the future, farrowing intentions in both December to February and March to May are moderate relative to year ago numbers. Right now, some analysts seem to expect a year-over-year increase in farrowings in the March to May timeframe and this could be associated with producers increasing supplies to fulfill needs of the new pork plants coming online in This, along with any surprises in breeding herd changes, will be watched closely to try and get a handle on what sort of hog supply change these new plants will generate. Overall, this upcoming Quarterly Hogs and Pigs report is rather concise, with no apparent significant disagreements between industry analysts. Weather: Today's U.S. and European models are in good agreement through 7 days, fair-poor agreement at days The U.S. model looks more likely to verify. During the 6-10 day period, the northern branch of the jet will feature a series of troughs extending from Alaska across northern Canada and Greenland, anchored by the polar vortex up near the pole. This will be a mild pattern for much of Canada due to the development of moderate Pacific air to the south of the polar vortex. The southern branch of the jet will feature a progressive pattern of low to moderate amplitude across the northern U.S. Available Gulf moisture with this pattern will be limited due to the fast movement of systems. Any significant precipitation with this pattern will be along the storm track over the north-central U.S. This will be a rather mild pattern due to the lack of cold air in Canada and the low moderate amplitude of the jet across the northern U.S. Dry weather dominated the Argentine growing regions yesterday. Temps topped out in the 80 s and 90 s in most cases. Rains will develop for the second half of this week and again into the weekend, providing moderate to heavy totals, which will further boost soil moisture and likely improving the health of the crops. Temps will run near average for this week and into the weekend. Rains of fell across around 85% of Santa Catarina, Parana and into southern MGDS and Sao Paulo, Brazil. Things were dry elsewhere. Highs were in the 80 s in most cases. Things will be quiet in the southern Brazilian growing regions in the next hours, with another round of rains indicated 7

8 to bring moderate totals by the end of the week and more rains by later next weekend/early next week. Rainfall activity in the tropical growing regions of Brazil north of Parana will run at near average levels in the northwest for the next 4-5 days and below in areas like Minas Gerais and Goias, with average rains seen for most areas in the 6-10 day period. Dry weather dominated all of the Plains and Midwest yesterday. Highs in the southern Plains were in the 40 s and 50 s in KS, with 50 s in OK and 60 s in TX. Lows were in the teens and 20 s. Dry weather will dominate much of the winter wheat areas of the southwest Plains in the next week to ten days, with an area of low pressure to bring rains to the eastern ½ of KS, OK and TX by the weekend. Totals with that activity still look to be in the range. The Midwest will see light snows in the far north today and then a system over the weekend will bring rains of.40-1 in most areas, with some wintry precip possible in the far northwest. Temps will remain out of the deep freeze in the Plains and Midwest for the next week to ten days and look to run average to even a bit above average for the rest of the next week to ten days. North American Weather Highlights: The central/southern Plains saw much colder than expected weather on Sunday morning that may have caused some winterkill in western areas due to a lack of protective snow cover, especially in areas stressed by dryness. Low temperatures fell to minus 15F or colder in west and north-central Kansas, Colorado and Nebraska, threatening wheat in areas of shallow or no snow cover. A major storm is forecast for the northern Plains and upper Midwest on Sunday, with wind and rain in the Midwest, mixed precipitation in the northern Plains. Global Weather Highlights: Timely and beneficial rains in Argentina during the next 5 days will favor developing corn and soybeans. Brazil will see generally favorable conditions for developing crops. Episodes of scattered showers and warm temperatures in South Africa will favor development of early planted corn. Planting in western growing areas is still in early stages at this time. Soils moisture in the west should allow for favorable germination and early development as crops are planted, weather permitting. Macros: The macro markets were modestly supportive as of 8:40am EST, with Dow futures up 0.1%, the U.S. dollar index is down 0.4%, crude oil is up 0.3% and gold is up 0.3%. The S&P 500 on Tuesday closed 0.36% higher, the DJIA gained 0.46%, and the Nasdaq gained 0.38%. Bullish factors included carry-over support from a rally in Japan's Nikkei Stock Index to a 1-year high on improved global growth prospects after Japan's Cabinet Office raised its Japan 2017 GDP forecast to 1.5% from July's estimate of 1.2%, and strength in energy producer stocks as the price of crude oil rose 0.85%. 8

9 The U.S. 30-year mortgage rate has soared by 62 basis points to 4.16% from the 3.54% level seen before the election. The sharp rise in mortgages rates has brought the mortgage refinancing market to a near halt. In fact, the MBA refinancing sub-index has plunged by 30% since the election to post a new 1-year low of in last week's report. However, the good news is that the surge in mortgage rates has not yet had a negative impact on mortgages applications for home purchases. In fact, the MBA purchase sub-index has actually risen by 8.0% since the election. That 8.0% rise in mortgage applications could be simply the result of potential homeowners trying to get a mortgage before mortgage rates rise even further. However, the fact that mortgage activity for home purchases has so far remained stable is a good sign for home buying activity. The market is expecting today's Nov existing home sales report to show a 1.8% decline to 5.50 million, reversing most of October's 2.0% increase to 5.60 million. Although U.S. existing home sales in October rose by 2.0% to a 9-3/4 year high of 5.60 million units, the question now is whether home sales will start to fall in November following the election and the surge in mortgage rates. The market consensus for today's weekly EIA report is for a 2.5 million barrel decline in U.S. crude oil inventories, a 1.5 million increase in gasoline inventories, a 1.75 million decline in distillate inventories, and a 0.4 point increase in the refinery utilization rate to 90.9%. U.S. crude oil inventories remain in a massive glut at 34.7% above the 5-year seasonal average. The recent oil production cut agreements among OPEC and non- OPEC members should help to start bringing down global oil inventories by mid However, U.S. oil inventories are likely to remain high as the rally in oil prices encourages U.S. oil producers to boost production, thus keeping U.S. oil inventories well above normal at least into Overnight, Bloomberg News reported that European stocks faltered after reaching the highest level in almost a year, as banks dragged indexes lower. Oil extended its advance and the dollar weakened against major peers. Spanish banks fell after a ruling in the European Union s top court that may result in them handing back billions of euros to mortgage customers. Italy s Banca Monte dei Paschi di Siena SpA fell on concern it may fail in its efforts to raise 5 billion euros ($5.2 billion) of funds and after it said its liquidity may turn negative in four months. Oil traded above $53.50 a barrel as data showed U.S. stockpiles declined last week. The yen strengthened and the dollar slid from the highest since 2003 versus the euro. Volumes are thinning and swings in global equities are muted, with a volatility gauge for European equities at the lowest since Equities have been rising to new highs on the prospects for increased government spending in the U.S. after Donald Trump won the Nov. 8 presidential election, while European stocks closed at the highest since Dec on Tuesday. Mohamed El-Erian and his former colleagues at Pacific Investment Management Co. say now s a good time 9

10 to take advantage of the latest rallies in global financial markets and scale back from risk. The Stoxx Europe 600 Index fell 0.2 percent at 11 a.m. in London. A gauge of European banks was among the worst performers, falling 0.6 percent, while financial services companies dropped 0.8 percent. Futures on the S&P 500 Index were little changed after the gauge rose 0.2 percent to 2,266.5 on Tuesday, a point below its all-time high. The Dow Jones Industrial Average closed at an unprecedented 19, The yen gained 0.3 percent to , after falling 0.7 percent on Tuesday. The euro added 0.2 percent to $1.0408, after touching an almost 14-year low of $ yesterday. The Bloomberg Dollar Spot Index was little changed after climbing for two straight days. The measure s gain for the quarter is 7.6 percent, heading for the biggest three-month advance since the third quarter of Yields on 10-year Treasury notes fell one basis point to 2.55 percent, after gaining two basis points Tuesday. Germany s 10-year bund yields dropped two basis points to 0.24 percent. Oil climbed 0.4 percent to $53.52 in New York. Crude inventories dropped by 4.15 million barrels, the American Petroleum Institute was said to report. Data from the Energy Information Administration on Wednesday is also forecast to show supplies shrank. Gold rose 0.2 percent to $1, an ounce, after closing near a 10-month low Tuesday. Copper extended Tuesday s rebound to climb 0.6 percent after global stockpiles stopped expanding. Summary: Yesterday was a down day across the grain sector again. The much improved weather in South America continues to heavily pressure the soybean market as beans were higher in the overnight session yesterday but faded throughout the day and closed near the low of the day. An overnight decline in Asian protein markets, weather model confirmation of additional incoming Argentine rains (including a wetter day forecast) and a slowdown in Chinese soybean purchases all contributed to the losses.once again the corn market was mostly sideways until the bean weakness kicked in to pull corn down with it. The wheat complex tried to rally early in the session but just couldn t hold to the positive side of the ledger. The market continues to focus on Argentina rains. With good rains forecasted for the next week, risk premium is starting to quickly leak from the market. Jan beans are starting to get close to key psychological level of $10.00, which we haven t seen since Nov 21 st. January options expire on Friday and there is very large open interest in the $10.00 puts. Egypt announced their wheat tender results, buying a robust 360,000mt of wheat from three different origins. Argentina, Russia and Romania won the bid and as usual, there was no U.S. wheat offered. Ocean freight market continues to freefall as shipping activity tends to drop into winter. Analysts are expecting the shipping markets to remain weak through the Chinese New Year at the end of January. 10

11 January soybeans posted a steep selloff Tuesday, skidding to their lowest level since Nov. 21. The action is negative and marks an accelerated breakdown from the recent minor bear channel. The bean contract is trading below its 10-day and 20-day moving average, which is a negative short-term trend signal. Also, a minor series of lower daily highs and lower daily lows is seen since the Nov. 28 peak at $ Momentum is pointing lower and favors the bears, with the 14-day relative strength index at 43% on Tuesday, down from 49% on Monday. Soybean bears have reasserted control of the short-term trend and further weakness is possible with major support at $9.75 1/4, the Nov. 14 daily low. On the upside, initial resistance lies at $ /2 and as long as that holds firm, bean bears will have the short-term technical edge. March corn futures pressed lower for the second session in a row on Tuesday. The corn contract is testing support at $3.50 1/4, the Dec. 8 low. Sustained declines below that floor this week would be a negative signal and would open the door to slippage toward $3.41 3/4. Corn is now trading below its 10-day, 20-day and 40-day moving averages, which is a weak short-term trend signal. Momentum also favors the bears. The 14-day relative strength index is pointing down at 44% on Tuesday. Corn has marked out an intermediate-term bottom on the daily chart at the Aug. 31 low at $3.25, but corn bears have reasserted control of the short-term trend this week. Resistance lies at $3.64 3/4 and then $3.69. A/C Trading Co. does not accept orders to buy or sell by , text or any other form of social media. This material has been prepared by a sales or trading employee or agent of A/C Trading Co. and is, or is in the nature of, a solicitation. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that A/C Trading Co. believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. 11