Opportunity in corn
Nov 17, 2017
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Yesterdays Close: December corn futures closed down 1 ¾ cents lower yesterday, trading in another narrow range of 2 ¾ cents. Funds were estimated sellers of 8,500 contracts on the day.
Fundamentals: Export sales yesterday morning came in at 949,500 metric tons, this was below the expected range of 1,200,000-1,700,000 and well below last week’s 2,364,500 metric tons. As mentioned before, the bulls need to see a trend of higher exports. A blow out number two weeks ago doesn’t mean much if we get a below estimate read the following week. Weather in South America will be the key catalyst on the radar of market participants over the intermediate term. There are still a few producers out there trying to finish harvest, but we are already getting some private analyst estimates for next years planted acres, they are looking for 91.415 million acres, this is up from 90.460 previously. December options expire next week, there are a lot of in the money puts and if you are holding those you should consult with our trade desk or your adviser on being proactive here.
Technicals: We will pick up where we left off on the fundamentals with regards to the options expiration. As of this morning there are 84,949 open in the money puts from 340-350. Large amounts of open interest at a certain strike can act as a magnet into option expiration. Due to option expiration we are changing our bias from bearish to neutral/bullish as we feel there is a good risk/reward in the very near term. Although next week will likely be a quiet holiday week, we would not be surprised to see the market grind higher and evaporate the premium in those puts. 342 ½-345 ¼ is the first resistance pocket the bulls need to get above to entice funds to cover a portion of their near record short position for this time of year. On the support side of things, 334-335 ½ remains intact.
Resistance: 342 ½-345 ¼**, 355¼***
Support: 334-335 ½***, 323-325 ¼**
Yesterdays close: January soybeans closed 3 ½ cents lower yesterday, trading in a range of 5 ½ cents on the day. Funds were estimated sellers of 4,000 contracts during the session.
Fundamentals: Export sales yesterday morning came in at 1,104,800 metric tons, this was towards the bottom end of the expected range from 1,100,000-1,500,000 metric tons and identical to last week’s 1,160,60 metric tons. As with corn, we did get some private estimates for the 2018 soybean crop at 89.627 million acres, this is down from 90.347 million acres previously. South American weather will continue to be the big fundamental catalyst all market participants should keep an eye on, this will undoubtedly have an effect on price action. As of right now, there does not seem to be much new news with regards to concerns which has kept a lid on the market this week.
Technicals: The market is working higher this morning, but bulls should be cautious until they can achieve above technical resistance. Technical resistance from 979 ¼-984 ¾ is the pocket the market needs to get back out above, this represents the 50, 100, and 200 day moving average as well as the 50% retracement from the June lows to the July highs; this was also previous support. If the market fails against these levels we could see long liquidation from funds, a break and close below 968 ¼ would accelerate the selling. Seasonal trends show that buying beans on November 16th and selling them on December 28th has been profitable 15 out of the last 15 years with the average gain of nearly 43 cents (this is not a trade recommendation).
Resistance: 979 ¼ -984 ¾***, 999 ¼-1004 ¾**, 1014**
Support: 968 ¼****, 957-963 ¼****, 947 ½**
Yesterdays close: December wheat futures finished the day near unchanged, trading in a five-cent range on the day. Funds were estimated sellers of 500 contracts on the session.
Fundamentals: Export sales yesterday morning came in at 489,300 metric tons, this was in line with the expected range from 350,000-550,000 metric tons but well shy of last week’s blowout number of 781,800 metric tons. As mentioned in most of the reports, we need to see a trend of higher exports, a flash in the pan here and there will not be enough to reinvigorate the bull camp and encourage short covering. A private analyst lowered their expectations for 2018 plantings from 45.875 million acres to 45.625 million acres.
Techncials: The bears remain in control until the bulls achieve consecutive closes above technical resistance which comes in from 434 ¼-436 ½. This pocket represents the recent high as well as the 50-day moving average, an indicator we have not seen the market close above since July. Consecutive closes above could entice funds to buy back a portion of their short position. On the support side of things, 416 ¼-418 will need to hold for bulls to sleep easy. A break and close below opens the door to a 3 handle over the intermediate term.
Resistance: 434 ¼-437 ¼**, 443****, 462 ¾**, 478-479****
Support: 416 ¼-418**, 399-402 ¾****, 390-392 ¼**
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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.