Sweet Corn
Corn – Corn prices jumped overnight on expectations that ethanol use will increase, after Congress on Friday passed a new farm bill which would mandate substantial increases in biofuel usage. The bill would push ethanol demand near production capacity and force the fledgling ethanol industry to find ways to use crop leftovers – such as husks and cobs – to produce the alternative fuel. Sagging Dollar prices have boosted export demand for Corn and related products, such as sweeteners, while lower feed stocks in Europe and Australia have also helped drive demand overseas. March Corn briefly made new contract highs in early trading and prices remain strong. The market is very overbought right now, but the overbought levels have been more than offset by strong momentum, which is outpacing the RSI indicator. Support for the March contract comes in at 425 and 410, while resistance can be found at 450 and 465.
Soybeans – Bean prices continue to rally in overnight trading on expectations that demand for U.S. exports will remain strong. The Dollar is trading a bit weaker in overnight trading, which could help give exports – which have already surpassed USDA estimates – a lift. China's appetite for Beans and Oilseed has not waned in the face of rising prices, and demand is forecast to remain strong through the end of the crop year. Crude Oil prices are lower in overnight trading and could hamper rallies, as it would adversely affect Bean Oil demand. January Soybeans remain overbought on the daily chart, with prices rising in 8 of the last 10 trading sessions. The overbought conditions may restrict further upside, but momentum remains very strong and is outpacing RSI in the early going. Support comes in at 1145 and 1114, while resistance may be found at 1175 and 1200.
S&P - Stock index futures are trading lower this morning on mounting fears of a severe slowdown or recession. While there is a contingent of analysts quick to use the R word, the fear of a severe slowdown is spreading in the same manner in which the credit crunch has spread to the broader economy. The Fed did little to boost investor confidence last week with a quarter point rate cut and its collaboration with European and Canadian central banks. New disclosures by Bank of America and Citigroup in relation to credit market exposure also shook investor confidence. Financial companies are leading the way lower this morning. After starting out with a boom, holiday sales are expected to disappoint and retail stocks have suffered this morning as a result. The December e-mini S&P is trading below both support at 1465 and the 18-day moving average this morning. A close below the 18-day could suggest that a recent high is in place. Momentum is showing bearish divergence from the RSI, suggesting more downside is definitely a possibility. Support can now be found at 1440 and 1406.25, while resistance comes in at 1483 and 1501.
Rob Kurzatkowski, Commodity Analyst
