Analysis: Corn, Soybeans, Wheat, and Cotton!

Published on: 07:57AM Oct 11, 2019


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Corn (December)

Fundamentals: December corn futures took a hit yesterday, following another bearish USDA report. The report showed corn production at 13.770 billion bushels with a yield of 168.4, both numbers for the bull camp to live with. The thorn in the side (again) was ending stocks at 1.929 billion bushels, expectations were for 1.784. Keep in mind that the USDA is scientific/data driven in their reporting and doesn’t speculate on potential weather or things of that nature. With that said, we’ve seen more bearish reports have less of a reaction, now attention will turn back to weather and harvest reports.

Technicals: The bear camp is rejoicing and claiming victory following yesterday’s USDA report, but as Lee Corso would say: “Not so fast my friend!”. The market is flirting with unchanged on the week and despite yesterday’s sell-off, bulls were able to defend significant support. Our 4-star support pocket has been 377-381 ½, this is a must hold pocket on a closing basis. If you had reduced against technical resistance earlier in the week, this is a good opportunity to consider getting that exposure back on.

Bias: Bullish

Previous Session Bias: Bullish/Neutral

Resistance: 398-401***, 412 ¾-417 ¼****

Support: 377-381 ½ ****, 363-366***


Soybeans (November)

Fundamentals: Soybean futures got a friendly report from the USDA, production at 3.55 billion bushels with yields at 46.9bpa, carryout at 460 million bushels, all below expectations. The market rallied initially but feel victim to negative money flow in the broader grain complex. Attention will now turn back to weather and trade. President Trump is scheduled to have the final meeting of this week, later this afternoon.

Technicals: The market has left some wicked bearish tails over the past two sessions, both on negative headlines. With that said, we remain optimistic on prices so long as technical support remains intact from 915-920. First resistance comes in from 936 ½-938 ¾, a close above here opens the door for a run at the June highs, 948.

Bias: Bullish

Previous Session Bias: Bullish/Neutral

Resistance: 936 ½-938 ¾***, 948-950****

Support: 915-920**, 899-906 ¾ ****, 879 ½-882 ¾***


Chicago Wheat (December)

Fundamentals: Wheat futures couldn’t avoid the pressure yesterday on the back of a relatively bearish report and spillover pressure from corn. Ending stocks came in at 1.043 billion bushels, 1014 was the average analyst estimate. If corn can stabilize to round out the week that should be friendly to wheat.

Technicals: In yesterday’s report we wrote: “If the bulls cannot achieve a conviction breakout, we could see prices retreat towards the bottom end of the recent range, the mid 480’s.”. The failure and bearish report took us down to first technical support which we defined in yesterday’s report as 483-486 ¾. If you’re bullish the market, there is good value at that low end of the range. We prefer playing the long side with KC Wheat.

Bias: Neutral/Bullish

Previous Session Bias: Neutral

Resistance: 500-506 ¼****, 525 ¾-531 ½****

Support: 483-486 ¾***, 476 ¼****, 469 ½-470**


Kansas City Wheat (December)

Technicals: The market fell back from the top end of the recent range but found support at our pocket from 397-400. We continue to believe that KC at these levels is a good risk/reward trade to the buy-side. Nearly all the markets have retraced losses from the August 12th USDA report, KC wheat has yet to do that, that comes in from 428-432 ¾.

Bias: Bullish

Previous Session Bias: Bullish/Neutral

Resistance: 415 ½-420***, 428-432 ¾****

Support: 397-400***, 380*


Cotton (December)

Fundamentals: The market fell back lower on the lack of bullish news from the USDA. The USDA has production coming in at 21.71 million bales, inline with expectations. Ending stocks came in at 7.00 million bales, also inline with expectations. All eyes on are today’s final round of trade talks, there has been a lot of positive news swirling which has propped up prices in the overnight session along with weather premium.

Technicals: The market is testing the top end of the resistance again, 62.91-63.39. If the bulls can chew through this pocket, there will be room to run back towards 65. 64.68-64.70 was previous support in June, the breakdown point and then resistance in July, this now becomes resistance.

Bias: Bullish/Neutral

Previous Session Bias: Neutral/Bullish

Resistance: 62.91-93.39**, 64.68-64.70****, 68.35-68.60***

Support: 59.58-60.79***, 56.59-57.55****

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC 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. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.