Blue Line Express (Morning Grains 10.31.17)
Oct 31, 2017
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Session Close: December corn futures closed near unchanged on Monday, trading in a 2 ½ cent range. Funds were estimated to have been even on the day.
Fundamentals: The grain complex continues to look for fundamental reasons for a new directional move (other than sideways). Export inspections yesterday morning came in at 517,679 metric tons, this was below the low end of the estimated range which came in from 600,000-800,000 metric tons; this is also below last week’s read of 614,075 metric tons. Yesterday afternoons crop progress report showed corn is now 54% harvested, this is in line with the range of estimates from traders but still 18% behind the five-year average. As with last week, Michigan, North Carolina, and Tennessee are the only states ahead of harvest pace.
Technicals: The market is continuing to trend sideways on the lack of new news to provide a technical breakout or breakdown. Support remains intact from 342 ½-344 ¼, this represents contract lows and closing contract lows. A break and close below could lead to another leg lower down to 335. On the resistance side, we have been keeping an eye on the 50-day moving average. This is slowly but surely working its way lower, this comes in at 351 ¾ this morning. A break and consecutive closes above this indicator could encourage funds to buy back some of their large short position. Fridays commitment of trader’s report showed that funds have a net (futures and options) short position of 174,394.
Resistance: 351 ¾-353¼**, 360-362***, 372-375**
Support: 342 ½-344 ¼**, 334-335 ½***
Session Close: January soybean futures closed three cents lower from Fridays close, trading in a 10 ¼ cent range on the day. Funds were estimated sellers of 6,000 contracts on Monday.
Fundamentals: Soybean futures have been working lower over the last two weeks as harvest activity continues to roll onward. Yesterday’s crop progress report showed that the US bean crop is now 83% harvested, this is just 1% behind the five-year average and was in line with estimates. The major laggards have been Iowa and Nebraska, but they have made up ground over the last week and are now just 8% and 4% behind the five-year average respectively. Yesterday morning export inspections came in at 2,505,988 metric tons, this was just a hair above the top end of the expected range of 2,000,000-2,500,000 metric tons; this also compares with last week’s read of 2,586,00 metric tons.
Technicals: the market is coming into a key support pocket with 981 ¾-984 ¾ being the first significant pocket. This represents the 200-day moving average, trendline support from the august lows, and the 50% retracement from the June lows to the July highs. Just below this pocket is the 50 and 100 day moving average at 976 ¼ and 976 ¼. So long as the bulls can maintain price action above these levels, they will remain in control. If the bulls can achieve a break and close below we could see additional long liquidation from the funds who decreased their net long position last week by 18,922 contracts. On the resistance side, 999 ¼-1004 ¾ is the pocket the bulls want to see a close above. Although this pocket contains the phytologically significant $10.00 level, there are also technicals involved.
Resistance: 999 ¼-1004 ¾**, 1014**, 1021 ¼****
Support:981 ¾-984 ¾**,976 ¼-976 ½***, 968 ¼**
Session Close: December wheat futures closed 2 ½ cents lower yesterday, trading in a 5 ¾ cent range on the session. Funds were estimated sellers of 3,000 contracts.
Fundamentals: Export inspections yesterday morning came in at 315,317 metric tons, this was towards the low end of the expected range which came in from 300,000-500,000 metric tons; although it was low it was much better than last week’s 171,000 metric tons. Ample global supplies and poor demand have kept a heavy lid on the market over the last week. Yesterday’s crop progress report showed that winter wheat is now 84% planted. The crop is rated 52% good/excellent, this versus the 58% we saw at the same time last year. The US Dollar will also be something to monitor throughout the rest of the week. We do have a Fed decision tomorrow which could put a pop in currencies and that could spill over to volatility in currencies.
Technicals: Wheat has been a technical graveyard for some time now and it doesn’t appear to be changing anytime in the very near future. If the market closes lower today, it will make it 18 out of the last 24 days of closes in the red. Contract lows of 422 ½ were tested yesterday but manage to hold, we would be very surprise to see that level hold throughout the week. A break and close below could offer some near-term capitulation, but the bears will remain in control until a close back above the 50-day moving average. The 50dma comes in at 439 and continues to creep lower.
Resistance:439-441***, 462 ¾**, 478-479****
Support: 422 ½****, 415 ¼**, 399-402 ¾****
As always, we will send out the Blue Line Express Grain Commentary before 8am cst Monday. If you are interested and are not yet on the distribution list, please email Oliver@BlueLineFutures.com.
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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.