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Morning Grain Commentary from Blue Line Futures

Published on: 13:13PM Oct 23, 2017

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CORN (December)

Last week’s close: December corn futures gave up 8 ½ cents in last week’s trade; opening and closing basically at the highs and lows respectively (the weeks range was 9 cents).  Majority of the pain came on Fridays session where we saw December futures trade 4 ½ cents lower to 344 ¼, the lowest closing price for this contract.  Funds were estimated to have been sellers of 11,000 contracts on Fridays session.  Fridays commitment of trader’s report showed funds are net short 170,684 contracts, this is an increase 7,747 shorts from the previous week (-162,937); keep in mind the data is only compile through Tuesday, so it is probably that their short position has grown.

Fundamentals: The bulls left standing in the market continue to search for a bullish catalyst to at least encourage short funds to consider covering.  Weather concerns here in the states are not that catalyst.  We have been delayed in harvest but that is not enough to spur the market higher.  This afternoons crop progress report is expected to show the US at 40% harvested, this is up 12% from the previous week (28%), but still lags the five-year average of 62% complete for this time.  Many market participants will be turning their attention towards weather in South America as they continue to plant.  Argentina is estimated to be 22% complete with their planting, this lags the three-year average and last year’s pace slightly. 

Technicals: Fridays session was not exactly the best close for those hoping to see the market form a bottom, or at the very least a near term bottom.  Keep in mind that the bottom is a process, not a point.  342 ½-344 ¼ was our key support pocket much of last week and will continue to be until we see a close below.  If we do see the market break down below this support pocket, we could see additional pressure down to 335 sooner rather than later.  The bulls will want to reclaim the psychologically significant 350 level, but 353 ¾ is the more significant resistance level. This represents the 50-day moving average, an indicator that the market has not closed above since the end of July.

Bias: Neutral

Resistance: 350-353 ¾**, 360-362***, 372-375**

Support: 342 ½-344 ¼**, 334-335 ½***

 

SOYBEANS (November)

Last week’s close: November soybean futures closed 21 ¼ cents lower in last week’s trade.  As with corn, the market basically opened and closed at the highs and lows respectively.  Much of the selling pressure came in on Friday with the market failing to hold an early morning rally.  Funds were estimated sellers of 8,000 contracts on Friday.  Fridays commitment of trader’s report showed that funds are now net long an estimated 68,168 contracts, this is up 37,176 contracts from the previous report of 30,992; keep in mind that these numbers are compiled through Tuesday.

Fundamentals: Weekly soybean export sales have been a bright spot for the bullish narrative, but long participants will want to see that trend continue to provide the market with a sturdy foundation.  Weather has been monitored closely here in the states and will continue to be as producers try to close the gap in their lagging harvest pace.  This afternoons harvest progress report is expected to show beans at 65% harvested, this compares with the 76% we see on the five-year average, but is still a nice increase from last week’s 49%.  As with corn, many active market participants will be shifting their focus to weather in South America, primarily Brazil and Argentina as they continue to plant.  Mato Grosso is a key region in Brazil to keep an eye on, they are estimated to be 26% complete with planting, this is well below last year’s record pace but still ahead of the three-year average for this time of year. 

Technicals: Soybeans have been trading very technically sound as of late.  Fridays failure at 993 ½ led to long liquidation and has brought the market back down to key technical support from 975 ¼-977.  This support pocket represents the 200-day moving average as well as the 50% retracement (or the middle of the range) from the June lows to the July highs.  If the bears achieve a close below, we could see additional pressure come into the market and press prices towards 960 ½-965.  This is a very significant pocket containing the 50-day moving average, 100 day moving average, trend-line support from the August lows, as well as another key Fibonacci retracement level.  Bulls will remain in control until this is breached on a closing basis. 

Bias: Bullish

Resistance: 993 ½**, 999 ½-1003 ¼**, 1014****

Support: 975 ¼-977***, 960 ½-965****, 939 ¾**

 

WHEAT (December)

Last weeks close: Wheat futures followed suit with corn and beans and finished the week lower.  The market traded 13 ¾ cents lower on the week, opening and closing at the highs and lows respectively.  Funds were estimated sellers of 3,500 contracts on Fridays session.  Fridays commitment of trader’s report showed that funds increased their net short position by roughly 10,000 contracts, putting their net short at 77,000 contracts.

Fundamentals: The market has been searching for a catalyst to provide support the market but is unable too.  Export sales were great last week, but that will need to be an occurring trend and not just a one-off to really bring value to the market.  Planting progress will be released after the close today, that will be something to note.  We will also be watching developments in key areas abroad such as Ukraine and France, where they are estimated to be 90% and 47% planted respectively.

Technicals: The market has continued to make lower highs and lower lows aver the past month and we would not be surprised to see that continue.  422 ½ is the key line in the sand that we will be watching on a closing basis.  This represents the contract lows from August 29th.  A break and close below could lead to accelerated selling pressure and an attempt of the bears to get a 3 in front of the price.  On the resistance side of things, 441-442 ¾ is the key pocket the bears will want to defend.  This pocket represents recent highs and the 50-day moving average, an indicator we have not closed above since July.  If the bulls can get a fundamental catalyst to propel the market above this pocket, we could see technical short covering ensue.  

Bias: Bearish

Resistance:441-442 ¾***, 462 ¾**, 478-479****

Support: 422 ½****, 415 ¼**, 399-402 ¾****

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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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