Daily Grain Technicals & Fundamentals (8.20.18)
Aug 20, 2018
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In the spirit of crop tours kicking off, we'd like to hear how things look in your area and get your general thoughts on the markets. Please email: Oliver@BlueLineFutures.com
Last Weeks’s Close: December corn futures finished Friday’s session down ¾ of a cent, trimming gains for the week to 7 ¾ cents after trading in a 16 ½ cent range. Friday’s Commitment of Traders report showed funds sold 7,886 futures through August 14th, increasing their net short position to 60,139 futures.
Fundamentals: Corn futures are trading near unchanged this morning despite renewed optimism regarding global trade. Several crop tours, including Pro Farmer’s are beginning this week which will undoubtedly draw a lot of attention this week as they make their way through the Midwest. Weekly crop ratings will be released after the close, many analysts aren’t expecting a big change from last week’s 70% good/excellent rating.
Technicals: The market is continuing to hover around the top end of our resistance pocket which we have had defined as 380 ½-382 ½, this pocket represents a key retracement from the May highs to the July lows, along with the original breakdown point from the August 10th USDA report. If the bulls can chew through this pocket, it would likely encourage additional short covering from the funds. The next objective would be 388 ½-389 ¾. On the support side of things, 374 is the first line in the sand the bulls MUST defend. A break and close below will do technical damage and likely accelerate the selling.
Resistance: 380 ½-382 ½***, 388 ½-389 ¾****, 393-395 ¼ **
Support: 374**, 366¼-369***, 349-352 ¼****
Last Week’s Close: November soybean futures finished Friday’s session up ¾ of a cent, narrowly extending gains for the week to 37 cents after trading in a range of 48 ¼ cent range. Friday’s Commitment of Traders report showed funds bought 832 futures through August 14th, cutting their net short position down to 62,234 futures.
Fundamentals: The Sunday night open was a wild one last night with prices trading in a 13 ½ cent range within the first 5 minutes of trading. Prices have since firmed up as market participants appear optimistic about the prospects of a trade deal with China. This has been a wild card for the market and will continue to be going forward. We would not be surprised to see nothing come of the meeting this week, the market retreat, and sometime in the near future see more headlines of another meeting. This is shaping up to be a classic buy the rumor sell the news market in our minds. Weekly crop progress will be released after the close, many analysts are expecting little change from last week’s 66% good/excellent rating.
Technicals: Soybeans caught a nice bid in the back half of last week as headlines hit that U.S. and China will resume negotiations (shocker). We would not be surprised to see a future headline read something like: “U.S., China trade talks hit a wall”. These back and forth headlines have shaken up the technicals drastically, traders should remain nimble with the understanding that you cannot change the headlines. We expect volatility to continue, which will present a lot of great near-term opportunities for those not married to a specific direction. First resistance this week comes in from 914-915 ¾, this pocket represents recent resistance along with a key retracement from the May highs to the July lows. Just above that is 922 ¼, a close above here will likely spark a bigger move.
Resistance: 914 ¼-915 ¾**, 922 ¼***, 943 ½****
Support: 890 ¼**, 881 ½- 882**, 860 ¼-866****
Last Week’s Close: December wheat futures finished Friday’s session up 17 ¼ cents, putting futures in positive territory by 10 ½ cents for the week, this after trading in a range of 33 ¼ cents. Friday’s Commitment of Traders report showed funds sold 1,125 futures through August 14th, trimming their net long position to 65,226 futures.
Fundamentals: Wheat futures caught a bid in the back half of last weeks trade on talks that Russia would pull back on their wheat exports, the market is seemingly brushing that off here in the early morning trade. Spring wheat harvest continues to roll onward, analysts are expecting this afternoons crop progress report to show it near 60% complete. We continue to lean on the bearish side here despite some of the bullish headlines recently. Keep in mind that information is already priced into the market before the headlines are printed.
Technicals: December wheat futures caught a nice gust of wind in their sails Friday afternoon on some fundamental headlines. The market finished the day near our resistance level at 578 ¾, this represents a key retracement from the December lows to the recent August 2nd spike high. The market has been retreating in the overnight and early morning trade as recent buyers look to lock in gains. On the support side of things, 549 ½-555 is the pocket the bulls MUST defend. A break and close below here takes us to 539 ½-540 ½. This pocket represents the 50 and 100 day moving average, along with the 50% retracement (middle of the range) over the last year. This was also the original breakout point from July 25th.
Resistance: 578 ¾-582 ¾****, 595 ½-600***, 613-615****
Support: 549 ½-555***, 539 ½-540 ½****, 522 ¼-523 ½***
If you have any questions or would like to discuss the markets in more depth, please do not hesitate to call or email.
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