Weekend Update (Grain & Livestock 8.5.18)
Aug 05, 2018
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December corn futures finished Friday’s session up 2 ½ cents, extending the gains for the week to 8 ½ cents. Friday’s Commitment of Traders report showed funds bought 69,310 futures from July 24th-July 31st, trimming their net short position to 95,613. The USDA will release their monthly report Friday, August 10th at 11:00am cst.
Quick Take: The market has managed to rally for three consecutive weeks now, the longest streak since the first half of February. We continue to feel that there is opportunity to the buy-side but are approaching some very significant technical barriers from 390-400. This pocket contains the 100 and 200 day moving average, the 50% retracement (middle of the range) on the year, anther key retracement, and the psychologically significant $4.00 handle. If the bulls cannot chew through resistance, we would expect to the market consolidate ahead of harvest. Check out tomorrow’s Grain Express for the full technical breakdown.
November soybean futures finished Friday’s session up 5 ¾ cents, extending gains for the week to 12 cents. Friday’s Commitment of Traders report showed funds bought 6,800 futures from July 24th-July 31st, cutting their net short position down to 66,559 futures. The USDA will release their monthly report Friday, August 10th at 11:00am cst.
Quick Take: Headline risk continues to be a factor that both the bulls and the bears have to tackle on a daily/weekly basis. Over the intermediate term we believe that there is still some value in the market, but we may see a more range bound trade in the short term, giving several opportunities for nimble traders and other market participants. First key resistance to start the week comes in from 915 ¾-920 ½, this pocket represents a key retracement, the 50-day moving average, and previously important price points in June. Check out tomorrow’s Grain Express for the full technical breakdown.
September wheat futures finished Friday’s session up 2 ½ cents, extending the gains to 28 ½ cents for the week. Friday’s Commitment of Traders report showed funds bought 28,674 futures from July 24th-31st, expanding their net long position to 51,277. The USDA will release their monthly report Friday, August 10th at 11:00am cst.
Quick Take: We have seen headline risk lead to a surge in volatility for soybeans over the last 2 months, but last week the biggest mover in the grains was soybeans. On Thursday the market tested limit up as headlines crossed that the Ukrainian Ag Minister said they would limit exports, those headlines were later walked back. For the week, September wheat futures traded in a 62 ¾ cent range. The has been constructive which goes against our fundamental bias, this kept our bias as neutral last week. Check out tomorrow’s Grain Express for the full technical breakdown.
October live cattle finished Friday’s session up 2.275, putting futures in positive territory by 1.35 for the week. Friday’s Commitment of Traders report showed funds bought 6,358 futures from July 24th-31st, expanding their net long position to 51,461 futures.
Quick Take: Cash trade last week started near 110 but finished Friday evening at 114. The surge in prices Friday afternoon were likely buyers stepping in in anticipation of a move higher. The chart remains constructive as we continue to make higher lows and higher highs, but these are not bad prices to reduce exposure if you bought trendline support last week. We are looking at shorting December futures against the top end of the range.
August feeder cattle finished Friday’s session up 1.60, putting them in positive territory by .30 for the week. Friday’s Commitment of Traders report showed funds sold 1,958 futures from July 24th-July 31st, cutting their net long position in half to 1,951 futures.
Quick Take: The market held technical support very well last week which gave bullish traders an opportunity to find value. The chart is still constructive over the intermediate term as we continue the 3-month trend of higher highs and higher highs. If the market cannot chew through resistance this week, we could see the market flatten out and provide a more rangebound trade. Significant resistance comes in from 155-156.
October lean hogs finished Friday’s session up 1.40, leaving futures near unchanged for the week. Friday’s Commitment of Traders report showed funds sold 5,608 futures, increasing their net short position to 7,633 futures.
Quick Take: Supply concerns continue to keep pressure on the market, but the market may be close to finding a near term bottom. Last week’s trade wasn’t a huge gain, but it was the most supportive week in the last 7. For clients who want to be long the market we would consider using call options, something that gives you good exposure with a defined risk.
If you have any questions or would like to discuss the markets in more depth, please do not hesitate to call or email.
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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.