Grains Under Pressure
Dec 11, 2017
Last Weeks Close: March corn futures finished Friday up 1 cent, trading in a range of 2 ¾ cents. Funds were estimated to have been buyers of 3,500 contracts. On the week, March corn futures finished 6 ½ cents lower and traded in a 10-cent range for the week. Fridays commitment of trader’s report showed that funds hold a net short position of 160,519 contracts, this versus laws weeks -196,763; a reduction of 36,244. Keep in mind that this data is compiled through Tuesday. We saw the funds holding a record net short position of 230,556 in the middle of November, that position has decreased 70,037 or 30%.
Fundamentals: Tomorrows USDA report will likely be the highlight of the week in terms of new news coming across the wire that doesn’t involve weather forecasts. The average analyst estimate for US corn carryout is at 2.478 billion bushels with estimates ranging from 2.394-2.517billion bushels. The average estimate for world ending stocks is 202.72mt with the range being 195.7-205mt. Once we get through the USDA report the attention will shift back to weather and crop development in South America.
Technicals: Corn has been range bound for the better part of the last three months which has presented some great opportunities for traders who recognized a sideways trend and weren’t sidetracked from the hope of a breakout. First technical resistance we will be watching this week comes in from 358-360 ½. On the support side of things, we are watching 348 ¾-350. Until we get a fundamental catalyst to provide the market with a breakout or a breakdown we will continue to trade the range.
Resistance: 358-360 ½****, 369 ¼-370 ½***, 375****
Support: 348 ¾-350**, 334-335 ½***, 323-325 ¼**
Last Weeks Close: January futures finished Fridays session down 1 cent, trading in a range of 10 ½ cents on the day. Funds were estimated sellers of 5,000 contracts. For the week, January soybean futures were a modest 3 ¼ cent lower after trading in a range of 29 cents. Fridays commitment of trader’s report showed that funds have a net long position of 54,885 contracts; this is up 24,840 from last week’s 30,045 (keep in mind the CoT data is compiled through Tuesday).
Fundamentals: As mentioned with corn, we will be looking forward to tomorrows USDA report for some sort of new news that isn’t weather related. The headline number will be US carryout. The estimates range from 426-486 mb with the average estimate at 438 mb. The average estimate for world ending stocks comes in at 97.82mt with the range coming in from 95.20-99.00 mt. Once this report is behind us, attention will again turn back to weather in South America and how it could affect their crop development.
Technicals: The market has softened up in the overnight and early morning session, breaking below the 50% retracement and testing the 100-day moving average at 980 ½. Although grains are softer across the board this morning, we are taking it with a grain of salt. Volume confirms price, and there is not enough volume from the Sunday night and early morning trade to confirm the lower trade. If we see follow through selling on the floor open we could see additional long liquidation press prices towards the bottom end of the range near 968 ¼.
Resistance: 999-1004**, 1015**, 1021 ½****, 1036-1041**, 1054 ¼****
Support: 981-984 ¾***, 977 ¼**, 967-968 ¼****
Last weeks Close: March wheat futures finished Fridays session down 3 ½ cents, trading in a range of 7. Funds were estimated sellers of 3,000 contracts. Wheat futures closed lower every day last week, taking of 20 ¾ cents from the previous weeks close. The weekly range was not much bigger at 25 ¼ cents. Fridays commitment of Traders report showed that funds bought 4,087 contracts (CoT data compile through Tuesday). This puts their net short position at 122,379.
Fundamentals: The market has been trending lower over the past six months as we continue to see ample supplies and poor demand linger over the market. Tomorrows USDA report will likely fall short of turning the fundamental tide. US carryout will be the one traders will be watching closely. The estimated range from 925-960 mb with the average estimate at 938 mb. World ending stocks are expected to come in from 264-270mt with the average estimate being 267.02mt.
Technicals: Technicals have been bearish for the better part of the last six months and if you’ve stuck to trading a bearish bias chances are you’ve done ok. Trading the bias has given shorts the opportunity to sell rallies and cover on dips (not flipping long). Although the market is nearing oversold conditions and the possibility of a short covering rally is good, we are not recommending new longs here. There is nothing worse than having a bias in the market and stuck on the wrong side.
Resistance: 424 ¼**, 430 ½-433 ½**, 443-445¾ ****
Support: 412 ¾**, 399-402 ¾****
Sign up for 1 or all 5 of our daily Blue Line Express commodity reports!
(Click the button to sign up for a FREE trial of our daily commodity commentary)
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.