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Weekend Ag Update (Grains & Livestock 9.9.18)

Published on: 21:54PM Sep 09, 2018

Corn

 

Last Week’s Close:  December corn futures finished Friday’s session up 1 ¼ cents, putting prices in positive territory by 1 ½ cents for the week.  Futures traded in a 8 ¾ cent range during the shortened trading week.  Friday’s Commitment of Traders report showed funds sold 1,234 through September 4th, expanding their net short position to 80,539 futures.

 

Quick Take:  The market was fishing for a bottom last week with futures trading in a relatively tight range.  There was a lack of conviction from the bulls and the bears as both await new news to hit the wires, that will come in the form of a USDA report which will be released Wednesday at 11am cst.  The bears are still in control until the bulls can achieve consecutive closes above technical resistance, a pocket which we defined last Monday as 369 ½-370 ¾.  Check out tomorrow morning’s Grain Express for the full technical breakdown and USDA estimates.

 

Soybeans

 

Last Week’s Close:  November soybean futures finished Friday’s session up 5 ¾ cents, trimming losses for the week to just ½ of a cent.  Futures traded in a 16 ¾ cent range during the shortened trading week.  Friday’s Commitment of Traders report showed funds sold 8,550 futures through September 4th, expanding their net short position to 69,799.

 

Quick Take:  There was a lack of new news last week which kept futures little changed in the shortened trading week.  Wednesday’s USDA report could provide the spark to give the market direction, until then, the bears remain in control.  In last Monday’s Grain Express, we labeled technical resistance as 850-853 ½, this pocket held and remains intact.  With that said, the bears do not want to see another test of this pocket, a close above will likely spark some short covering.  Check out tomorrow morning’s Grain Express for the full technical breakdown and USDA estimates.

 

Wheat

 

Last Week’s Close:  December wheat futures finished Friday’s session down 1 ½ cents, extending losses for the week to 33 ½ cents.  Futures traded in a 35 cent range during the shortened trading week.  Friday’s Commitment of Traders report showed funds sold 10,101 futures through September 4th, trimming their net long position to 35,997. 

 

Quick Take:  Short wheat has been the gift that keeps on giving, and though we still believe we can see prices below the psychologically significant $5.00 handle, bears need to be aware of possible short covering.  Price is what you pay, value is what you get, and the value to the short side has shrunk a lot over the last few weeks.  If you haven’t been able to enjoy a piece of the more than $1.00 decline in the last month, we do not recommend chasing it right here right now.  Please do not confuse this with a buy recommendation.  Check out tomorrow morning’s Grain Express for the full technical breakdown and USDA estimates.

Live Cattle

 

Last Week’s Close:  October live cattle futures finished Friday’s session up 1.15, putting prices in positive territory by 1.375.  Futures traded in a 2.40 range for the shortened trading week, that range was established in Tuesday’s session.  Friday’s Commitment of Traders report showed funds sold 701 futures through September 4th, trimming their net long position to 58,319.

 

Quick Take:  Futures failed against our resistance pocket to start last week’s trade but finished the week right back against it.  Significant resistance on a closing basis comes in from 110.35-110.575, this pocket represents trendline resistance, the 200 day moving average, and last weeks high.  From a risk reward perspective, the shorts have an advantage.  A close above resistance changes the tide and could spur new buying interest. 

 

Feeder Cattle 

 

Last Week’s Close:  October feeder cattle finished Friday’s session up 1.375, extending gains for the week to 4.05.  Futures traded in a range of 4.975 during the shortened week.  Friday’s Commitment of Traders report showed funds sold 495 futures through September 4th, expanding their net short position to 941. 

 

Quick Take:  Feeder cattle was the surprise of the week for us, primarily the strong close we saw on Friday.  Futures are testing the top end of the recent range and continued strength could take us back towards the July highs of 155.375.  If the bulls fail to maintain momentum in the first half of the week, expect some long liquidation to ensue.

 

Lean Hogs

 

Last Week’s Close:  October lean hogs finished Friday’s session up .65, extending gains for the week to 5.20.  Futures traded in a 5.65 range during the shortened week.  Friday’s Commitment of Traders report showed funds bought 7,467 futures through September 4th, expanding their net long position to 13,080.

 

Quick Take:   October lean hogs managed to catch a bid last week, more so than we would have thought compared to the deferreds.  We have not been doing a lot with the front month futures but looking out to December and February to build longer term positions with both futures and options.   We like long call options as a way to get exposure with limited risk, the wild card is a bigger swine fever breakout than the market is pricing in right now.  On the technical side of things, finding meaningful support and resistance levels is a fool’s errand for the October contract.

 

 

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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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