Grain markets under pressure
Feb 05, 2018
Last Week’s Close: Corn futures finished the week up 4 ¾ cents, trading in a range of 5 ¾ cents for the week. Friday’s Commitment of Traders report showed that funds were buyers of 88,003 contracts, this was one of their biggest single week by back campaigns on record which has led to their smallest short position since September.
Fundamentals: Weather and crop development in South America continue to be a key talking point. Some areas that have been worrisome are expected to get some precipitation by the end of the week, the weather premium has been evaporating in in the overnight and early morning session. If those rains dissipate, expect to see the market find support; regardless, you should keep the expectations tempered. Last week Informa Economics pegged the Argentinian crop at 37 million metric tons, this was revised lower from previous estimates. They have the Brazilian crop estimated to be 88 million metric tons. There is a WASDE report on Thursday, we do not expect anything significant but will have estimate’s out by Wednesday morning.
Technicals: The market has been constructive over the past three weeks, there is no question about that. The funds have reduced a very large amount of short positions which reduces the fear of a massive short covering rally. The market is testing first support this morning which comes in from 357-358 ½. A break and close below invites the funds back in which would open the door for a run back towards....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Last Week’s Close: Soybean futures finished the week down 7 ½ cents, trading in a range of 27 ¾ cents. Friday’s Commitment of Traders report showed that funds were buyers of 58,076 futures, this was one of their biggest buy back weeks on record. Funds now have a net short position of 23,142 futures. Keep in mind that the CoT data is only compiled trough Tuesday.
Fundamentals: As with corn, weather and crop development have and will continue to be the headline driver over the intermediate term. Argentina has been hot and dry which has offered support to the market, but rains are working their way back into the forecast by the end of the week which has the market retreating. Infroma Economics updated their estimates last week for Argentina and Brazil’s crop. Argentina is expected to come in at 51 million metric tons, this is a reduction from their previous estimate. There is a WASDE report on Thursday, we do not expect anything significant but will have estimate’s out by Wednesday morning.
Technicals: The market failed against our technical resistance pocket from 999-1006 last week which invited shorts back into the market. Prices held 980 on the first test but the inability to sustain a bounce led to additional selling pressure. New news on the wires has led to a continuation of that pressure. 971 ¼ has been a level on our radar for several weeks, this was previous resistance, and now becomes support on the first test. If the bulls cannot defend this level on a closing basis, we expect to see....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Last Week’s Close: Wheat futures finished the week up 4 ¾ cents, trading in a range of 15 ¾ cents. Friday’s Commitment of Traders report showed funds were aggressive buyers, covering 58,245 futures. This puts their net short position at 91,532.
Fundamentals: Wheat futures had found some support on the back of cold and dry weather across the Midwest coupled with the USD at multiyear lows which encouraged short covering from the funds. Chances of precipitation have increased for the southern plains over the next week and a half, this has led to the pressure to start the week. If those forecasts don’t change, we expect to see more pressure on this market.
Technicals: Wheat futures staged a strong rally to end the month of January, bringing the RSI to overbought levels we have not seen since we peaked in July. The RSI (relative strength index) is now back to neutral with a reading of 53.36. The market has retreated nearly 20 cents off the highs posted just last week. If the bulls cannot get a foot hold here, we expect to see the sellers step back in and press us back towards the contract lows. The market is treading right at the 100-day moving average which we listed as first support in our Weekly Levels report. The next line in the sand comes in at....Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
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