Weekend Update: Grains and Livestock (7.29.18)
Jul 29, 2018
December corn futures finished Friday’s session up 1 ¼ cents, extending the gains for the week to 7 ¼ cents. Friday’s Commitment of Traders report showed that funds bought 1,042 futures From July 18th-24th, narrowly trimming their net short position to 164,923 futures.
Quick Take: The market staged a nice rally last week before failing against our technical resistance pocket which we have had defined as 376 ¼-379 ¼. This pocket represents previous lows in December and January, previous support now becomes resistance. If the bulls are able to chew through resistance an can achieve consecutive closes above, it could lead to additional short covering and invite new buyers back into the market.
November soybeans finished Friday’s session up 11 ½ cents, extending gains for the week to 19 ¼ cents. Friday’s Commitment of Traders report showed that funds sold 1,350 futures from July 18th-24th, increasing their net short position to 73,359 futures.
Quick Take: New news last week regarding trade with the EU helped offer support to the market, this was one of our expectations and a key reason we changed our bias from neutral to bullish two weeks ago. We continue to be optimistic on prices but remain nimble around a core position. The market tested and failed against our 3-star resistance pocket from 897 3/5-901 ¾, this pocket represents the psychologically significant $9.00 handle, along with previously important price points from June and July.
September wheat futures finished Friday’s session down 5 ¼ cents, trimming gains for the week to 14 ¾ cents. Friday’s Commitment of Traders report showed that funds bought 19,822 contracts from July 18th-24th, increasing their net long position to 19822 futures.
Quick Take: We have had a bearish bias on wheat put changed our bias to neutral before the floor open on the 25th as the market was testing our resistance pocket from 522-524 ½ for the second time in a matter of days. The more times a level is tested the lest significant it becomes. That pocket will now become support for this week’s trade. We continue to have a bearish fundamental bias but will be patient in picking entry points.
August live cattle finished Friday’s session up 1.075, trimming losses for the week to just .10. Friday’s Commitment of Traders report showed that funds bought 11,147 futures from July 18th-24th, expanding their net long position to 45,103 futures.
Quick Take: Live cattle futures have been trading technically sound over the last week. August futures ran into trendline resistance on Thursday which triggered a quick round of profit taking to the bottom end of support. The longer-term trend of higher lows and higher highs remains intact. Shorter term moving averages crossing above longer term ones, this is referred to as a “golden cross” and is looked at as bullish. With first notice day approaching for August, we will be turning our focus to October and December futures.
August feeder cattle finished Friday’s session up 1.075, trimming the losses for the week to 1.00. Friday’s Commitment of Traders report showed that funds bought 2,980 contracts from July 18th-24th, increasing their net long position to 3,909 futures.
Quick Take: Despite the pull back on the week, the trend of higher lows and higher highs remains intact. If the market continues to give up ground this coming week that could encourage some long liquidation. There is a significant amount of technical support from 147.95-148.35. As with live cattle, we are seeing shorter term moving averages crossing above longer term ones, this is referred to as a “golden cross” and is looked at as bullish
October lean hog futures finished Friday’s session down 1.25, finishing the week in negative territory by .15. Friday’s Commitment of Traders report showed funds bought 3,725 futures from July 18th-24th, trimming their net short position to just 2,025 futures.
Quick Take: We have been raising the caution flag on lean hog futures for the better part of the last month as our technical indicators started to look dismal. There will likely be a nice opportunity for a short relief rally, but futures may not be the best option (no pun intended). We are looking at using long calls, something that gives us good exposure with known risk. If we can’t get a move in the next week and a half, we would look at exiting the position regardless.
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.