Weekend Update: Grains and Livestock (9.30.18)

Published on: 18:09PM Sep 30, 2018

Corn

Last Week’s Close:  December corn futures finished Friday’s session down 8 ½ cents at 356 ¼.  For the week, futures lost 1 ¾ cents, trading in a 12 ¼ cent range.  Friday’s Commitment of Traders report showed funds were buyers of 33,569 futures through September 25th, shrinking their net short position to 124,855 futures. 

Quick Take:  Friday’s USDA report was more bearish than expected with ending stocks coming in at 2.14 billion bushels, this compares to the pre-report estimates of 2.010 billion bushels. This report coupled with a technical breakdown erased the 5-day win streak in a matter of hours.  For the past two weeks we have been writing about 366-369 being a significant resistance pocket, represent the original breakdown point from the August 12th USDA report, key retracements and moving averages, along with previously important price points.  Last week’s trade markets lower highs which keeps the bears in full control and leaves the door open for lower lows.

Soybeans

Last Week’s Close:  November soybeans finished Friday’s session down 9 ½ cents at 845 ½.  For the week, futures lost 1 ¾ cents, trading in a 22-cent range.  Friday’s Commitment of Traders report showed funds bought back 22,091 futures through September 25th, shrinking their net short position to 60,126 futures.

Quick Take:  Friday’s USDA report was more bearish than market participants were expecting, quarterly stocks came in at 438 million bushels, above the average trade estimate of 401 million bushels.  This coupled with a chart failure invited the sellers back into the market.  In our daily Grain Express this past week we laid out a bearish bias with significant resistance from 858-863 ¼, this gave bears a great opportunity to get back in at a better price than just two weeks ago.  For the bulls out there, remember that the bottom is a process, not a point.  Despite the technical failure the chart is becoming more constructive, so there is light at the end of the tunnel.

Wheat

Last Week’s Close:  December wheat futures finished Friday’s session down 4 cents at 509.  For the week, futures lost 12 ¾ cents, trading in a 25 ¾ cent range.  Friday’s Commitment of Traders report showed funds bought 8,478 futures through September 25th, putting their net long position at 227 futures.  

Quick Take:  Friday’s USDA report came in neutral to bearish with ending stocks reported at 2.379 billion bushels, a hair above the average analyst estimate of 2.343 billion bushels.  The market’s initial reaction was a move higher on short covering, that was then sold into as weakness in corn and beans spilled over into wheat.  The wheat market poked its head above our resistance pocket from 523 ½-525 ¾ last week but didn’t spend much time there.  If you’ve been reading our daily Grain Express, you know we have been overwhelming bearish this market and using bounces as selling opportunities.  The path of least resistance has been lower with the trend of lower highs and lower lows continuing for the better part of two months now, we can’t find any reason to fight this trend at the moment so we remain bearish.  If the bears cannot break the market back to new lows, that will neutralize the chart and our bias. 

Live Cattle

Last Week’s Close:  December live cattle futures finished Friday’s session up .275 at 118.85.  For the week, futures finished up .40, trading in a range of 2.45.  Friday’s Commitment of Traders report showed funds bought 4, 187 contracts through September 25th, expanding their net long position to 75,325 futures.

Quick Take:  The market softened up to start the week following a moderately bearish Cattle on Feed report the previous Friday.  That technical pull back was bought up quickly thanks to constructive chart developments.  For the past several months we have been playing the trading range, but the bull flag break out on September 14th turned the tide.  The chart structure remains friendly, but bulls shouldn’t get too greedy against contract highs.

Feeder Cattle

Last Week’s Close:  November feeder cattle finished Friday’s session up .425 at 158.05.  For the week, futures were up .25, trading in a range of 2.825.  Friday’s Commitment of Traders report showed funds bought a whopping 32 contracts, expanding their net long position to 3,619 futures.

Quick Take:  Feeder cattle finished the week in the middle of the recent range, basically 155-160.   The bulls have an advantage and pull backs will likely be bought, but bulls should temper their expectations.  Position sizing is key when trading a market like this.  We often work with clients in establishing a core position in relation to their bias, while trading a portion against technical levels.  Though we could break out above 160, it is really an area to reduce risk.

Lean Hogs

Last Week’s Close:  December lean hog futures finished Friday’s session up 2.45 at 57.925.  For the week, futures finished up .525, trading in a 3.925 range.  Friday’s Commitment of Traders report sowed funds bought 3,542 contracts, expanding their net long position to 29,752 futures.

Quick Take:  We saw a very volatile finish to the week with Thursday testing limit down and Friday testing limit up.  We saw a lot of data come in with Cold Storage early in the week and Hogs and Pigs report later in the week.  This whipsaw price action likely shook A LOT of weak longs and weak shorts out of the market.  We continue to believe this market has more upside potential with the chart remaining constructive and fundamentals steady. 

 

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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.

 

Sign up for a free trial of 1 or all 5 of our free daily commodity reports!

 

 

 

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.