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Corn set for a bigger rally

Published on: 12:55PM Apr 25, 2018

CORN (July)

 

Yesterday’s Close:  July corn futures finished the day up 2 ½ cents, trading in a range of 4 ½ cents.  Funds were estimated buyers of 9,500 contracts.

Fundamentals:  Corn futures got some nice support from spill over strength in the wheat market in yesterday’s trade.  Near term weather continues to dominate the headlines which has also helped support price to some extent.  Although we do not believe this is a serious concern yet, the market is slowly making adjustments.  Some areas that have been delayed look to have a nice window over the next 1-2 weeks.  We are more concerned about weather on the extended forecast.  Some meterologists are suggesting that we could see one of the hottest/driest Junes on record.  If this is the case, we would find it hard to believe that the funds would want to liquidate their long position in to that.  We will get the weekly EIA ethanol numbers out this morning.

 

Technicals:  July corn futures have been very constructive to start the week, holding significant support after last weeks slow bleed lower.  Prices reclaimed ground above first resistance yesterday which has them pressing up against our next pocket from 392 ½-393.  If the bulls can achieve a conviction close above this pocket, we would expect to see a run back towards 400 ½-402 ¾.  On the flip side, previous resistance now becomes support; that comes in at 387 ¼. 

 

Bias: Bullish

 

Resistance: 392 ½-393***, 400 ½-402 ¾****

Support: 387 ¼**, 379 ½-383 ½****, 377 ½**

 

SOYBEANS (July)

 

Yesterday’s Close:  July soybean futures finished the day up 1 ½ cents, trading in a range of 10 ¼ cents.  Funds were estimated buyers of 6,500 contracts.

Fundamentals:  The USDA announced a sale of 130,000 metric tons of beans to Argentina yesterday (60,000 for this year and 70,000 for 2018/2019) which gave the market a nice pop on the floor open.  The bull camp wants to see more sales through the week to help the market stabilize in the near term.  China has been somewhat absent recently which has encouraged some long liquidation from the funds over the past two weeks.  Weather continues to be monitored and a concern for some.   Planting delays in corn have led to chatter of acres moving to beans.  If corn planting pace picks up in the near term, we could see that support the market.

 

Technicals:  The market tested our support pocket from 1025 ¾-1027 ¾ yesterday and held on the first test.  This pocket represents the 100-day moving average, previous support in March, and the 50% retracement (middle of the range) from the January 12th lows to the March 2nd highs.  As mentioned yesterday, this was a spot for shorts to reduce and for longs to step in on the first test.  “On the first test” is key here, a revisit to this pocket will likely giveaway.  First technical resistance comes in at 1042 ½; this level represents a key retracement along with a previously important price point. 

 

Bias: Neutral

 

Resistance: 1042 ½**, 1050***, 1060 ¾-1064 ½**, 1077-1078***

Support:  1025 ¾-1027 ¾***, 1013-1016***, 988 ¾-994 ¾****

 

WHEAT (July)

 

Yesterday’s Close:  July wheat futures finished the session up 10 cents, trading in a range of 17 ¼ cents.  Funds were estimated to have been buyers of 2,000 contracts. 

 

Fundamentals:  Wheat futures caught a nice bid yesterday as the realization of some crop damage due to the recent cold weather made the rounds.  We will continue to have an emphasis on the Kansas City futures, we expect them to continue to be the leader for Chicago futures.  There annual wheat tour kicks off on May 1st, this will be something to keep an eye on.  If the tour starts reporting more damage and lower yields, we would expect to see this market get some legs.

 

Technicals:  Yesterday’s rally brought prices to our first resistance pocket which we have defined as 486-488 ½.  This pocket represents the 50 and 200 day moving average, along with the 50% retracement from the January lows to the March highs.  If the bulls can achieve a conviction close above this pocket, we would expect to see a move back above the $5 handle.  A failure to breakout will mark lower highs which could lead to lower lows and a test back to 459-461 ¾. 

 

Bias: Neutral

 

Resistance: 486-488 ½****, 494-496 ¾***, 508 ½-510 ½**

Support: 472 ¾-475 ¼***, 459-461 ¾****, 440 ¼**

 

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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.

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