Has wheat found a bottom?
Nov 03, 2017
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Aside from this grain video, we posted a livestock one on our website: BlueLineFutures.com
Yesterday’s Close: December corn futures closed 2 ¼ cents higher yesterday, trading in a 4 ½ cent range on the day. Funds were estimated buyers of 8,000 contracts for the session.
Fundamentals: Yesterday morning’s export sales came in at 811,400 metric tons, this was on the low end of the expected range from 800,000-1,100,000 and considered a disappointment by many. We have started to see more yield estimates come out as we look ahead to next week’s USDA report which will be released Thursday. FC-Stone came out earlier in the week with an estimate of 173.7 bushels per acre, a large jump from their August estimate of 162.8. Informa Economics released their estimates yesterday and their estimates were nearly identical at 173.4 bushels per acre, up nearly three bushels from their previous estimate. Their increased yield projections led to an increase in final production from 14.182 billion bushels to 14.41 billion bushels. We will continue to compile estimates and provide a convenience table for you next week.
Technicals: Yesterdays price action was encouraging for the bulls, but they will want to see a conviction close above technical resistance to sleep easier. As mentioned in yesterday’s report, we are turning more bullish but need to see the market break out to encourage additional short covering. First technical resistance comes in at 351 ¼ this morning. This represents the 50-day moving average, an indicator we have brought up consistently. We have not closed above the 50dma since July, so we believe it carries some weight. The more significant line in the sand comes in at 355 ¼. This represents the recent highs; a trade above would mark higher highs on the back of higher lows.
Resistance: 351 ¼**, 355¼***, 360-362***, 372-375**
Support: 342 ½-344 ¼**, 334-335 ½***
Yesterdays Close: January soybean futures closed 8 cents higher yesterday, trading in a 10 ½ cent range on the day. Funds were estimated to have been buyers of 9,000 contracts for the session.
Fundamentals: Yesterday morning’s export sales came in at 1,967,000 metric tons, this was above the top end of the expected range from 1,450,000-1,850,000. Going above and beyond has been a recent trend, the market will need to see this continue to offer additional support in the market. As with corn, we are starting to see yield and production estimates come out as we look towards next week’s USDA report. We mentioned yesterday that FC-Stone has their estimate at 47.7 bushels per acre. Informa Economics estimates were released yesterday, and they lowered their estimate from 50.0 to 49.7 bushels per acre. This would put total production at 4.447 compared to the 4.474 billion bushels in their previous estimate. We will continue to compile estimates and provide a convenience table for you next week.
Technicals: The soybean chart is “gorgeous” as we mentioned yesterday on Market Rally Radio. Several Technicals have held as support which puts the bulls in a good spot. Our resistance pocket for the past two weeks has come in from 999 ¼-1004 ¾, the bulls will want to see a close above to encourage funds to extend their net long position. The next line in the sand for us comes in at 1021 ½. If the market cannot break out above resistance, we could see the market consolidate back towards trendline support which has crept up to 987 ¼. A failure could start to shift our bias.
Resistance: 999 ¼-1004 ¾**, 1014**, 1021 ¼****
Support:987 ¼**, 984 ¾**,979***, 968 ¼**, 957-963 ¼****
Yesterdays Close: December wheat futures closed 9 cents higher yesterday in a trading range of 9 ¼ cents. Funds were estimated to have been buyers of 7,000 contracts for the session.
Fundamentals: Yesterdays weekly export sales came in at 347,800 metric tons, although this was within the expected range from 250,000-450,000 metric tons, it is a far cry from exciting. Export sales were down 4% from last week and are 15% below the four-week average. The market needs to see a stable increase in demand to help whittle down the ample global supplies in order to put a floor in the market.
Technicals: The market saw a “nice” rally yesterday on the back of no fundamental news. This is likely short covering and it is possible we see some follow through into the weekend. Rallies have been short lived, and we remain bearish until the market can achieve consecutive closes above technical resistance. We would be looking to put shorts back on closer to 438 with risk much more defined in our opinion. Will the market get there? Remains to be seen, but we will be patient as there is never a good reason to force a position.
Resistance: 438 ¾-441***, 462 ¾**, 478-479****
Support: 415 ¼**, 399-402 ¾****, 390-392 ¼**