Weekend Ag Update (Grains & Livestock 10.14.18)

Published on: 17:06PM Oct 14, 2018

Corn

 

Last Week’s Close:  December corn futures finished Friday’s session up 4 cents, extending gains for the week to 5 ¼ cents.  Futures traded in a 13 ¾ cent range.  Friday’s Commitment of Traders report showed funds bought back 27,988 contracts through October 9th, shrinking their n et short position to 39,399 futures.

 

Quick Take:  Corn bulls finally got a friendly USDA report, which was constructive for the technical landscape as well.  In Friday morning’s Grain Express, we introduced our first bullish bias in what feels like a life time.  Friday’s conviction close above 370 could be the trigger to encourage additional short covering and invite momentum traders back into the market.  There is some technical resistance from 373 ¾-375 ¾, this pocket represents the 100-day moving average and a key retracement on the year.  If the bulls can chew through this pocket their next objective is 386-387 ¾, this pocket represents the 200-day moving average, the 50% retracement (middle of the range) from the May highs to the September lows, as well as other previously important p rice points. 

 

Soybeans

 

Last Week’s Close:  November soybean futures finished Friday’s session up 9 ¼ cents, trimming losses for the week to 1 ¾ cents.  Futures traded in a 27 ¾ cent range.  Friday’s Commitment of Traders report showed funds bought back 3,187 contracts through October 9th, trimming their net short position to 39,691 futures.

 

Quick Take:  Soybeans finished the back half of the week on firm footing which could bode well for the bulls in the near term.  Our resistance pocket from 870 ¾-875 was defended by the bears last week, but a retest this week would likely lead to another round of short covering.  The chart has been more constructive as of late and if the bulls can get this next leg higher we would mark higher lows and higher highs, giving the bull camp a clear advantage for the intermediate term.  Due to recent money flows and developments on the chart we have turned our bias from “Neutral” to “Bullish/Neutral”.

 

Wheat

 

Last Week’s Close:  December wheat futures finished Friday’s session up 9 ¾ cents, trimming losses for the week to 5 ¼ cents.  Futures traded in a 19-cent range.  Friday’s Commitment of Traders report showed funds sold 6,390 contracts through October 9th, expanding their net short position to 18,098 futures.

 

Quick Take:  The market trade within our technical support and resistance pockets perfectly last week.  Our resistance pocket from 523 ¼-528 remains intact, as does support near 505.  A breakout or break down from these levels will give likely give the market its next trend.  We have been bearish wheat for the past several months, working with clients to sell rallies and reduce shorts against technical support (rinse and repeat).  Over the last few weeks, the market has been consolidating, changing the trend from lower to sideways.  We recognize that the sideways trade could be the market trying to form a bottom, which has reduced our bearish convictions.

 

Live Cattle

Last Week’s Close:  December live cattle futures finished Friday’s session down .475, extending losses for the week to 1.975.  Futures traded in a 2.60 range.  Friday’s Commitment of Traders report showed funds sold 2,642 contracts through October 9th, trimming their net long position to 78,452 futures.

 

Quick Take:  Live cattle worked lower after failing against technical resistance, the long liquidation has brought prices back towards significant technical support.  When we say “significant” that does not mean it is guaranteed to hold, it means that a failure to hold will change our bias.  We have suggested that there is a new trading range in play, we have defined that as 116-120 (roughly).  The lower end of that support range comes in near 115.50, this represents the 50-day moving average and the original breakout point (previous resistance now becomes support) from September 14th.  A break and close below here likely takes us down to 114.05-114.375, this pocket represents the 100 and 200 day moving average, along with a key retracement on the year.

 

Feeder Cattle

 

Last Week’s Close:  November feeder cattle finished Friday’s session down 2.25, extending losses for the week to 3.90.  Futures traded in a range of 4.125.  Friday’s Commitment of Traders report showed funds bought 615 contracts through October 9th, expanding their net long position to 5,398 contracts. 

 

Quick Take:  Feeder cattle rolled over hard on Friday, catching several market participants off guard.  The must hold support pocket for the bulls to start the week comes in from 153.75-154.45, this pocket represents the 50-day moving average along with a key retracement on the year.  A break and close below here negates our previous thoughts that the market has formed a higher trading range, putting the bears back in the rivers seat.

 

Lean Hogs

 

Last Week’s Close:  December lean hogs finished Friday’s session up .50, trimming losses for the week to 2.65.   Futures traded in a range of 4.475.  Friday’s Commitment of Traders report showed funds bought 410 contracts through October 9th, expanding their net long position to 36,666 futures.

 

Quick Take: Lean hogs tried to stage a rally on Friday but gave that up as the closing bell approached.  Last week’s trade marked lower highs and lower lows, neutralizing some of the euphoria that we have seen come into the market over the past 2 months.  54 is a significant trend changing level, this pocket represents the 50- and 100-day moving average, a break and close below here would also confirm a bearish head and shoulders formation.  On the resistance side of things, the bulls must reclaim ground above 57 on a closing basis to encourage a move above 60.

 

 

 

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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.