Daily Grain & Cotton Commentary (1.21.20)

Published on: 07:57AM Jan 21, 2020
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Corn (March)

Fundamentals: March corn futures rallied hard on Friday, erasing all of Thursday’s losses and then some. Rumors that China secured multiple cargoes of US corn helped offer support, but there hasn’t been confirmation on that yet. We believe technicals and money-flow are leading catalysts near term. Option expiration on Friday could keep the market pinned near term. Friday’s Commitment of Traders report showed that funds bought 6,367 contracts through January 14th, trimming their net short position to 79,140 contracts.

Technicals: The market was technically sound last week, testing and holding the top and bottom ends of resistance and support which we defined as 390 ½-392 and 377-381. In our Weekend Ag Update, we talked about reducing longs and even looking to the short side on Friday, against technical resistance. 383-385 is the near-term target. We believe that Friday’s option expiration will keep us range-bound this week, barring any groundbreaking news.

Bias: Neutral

Previous Session Bias: Neutral/Bullish

Resistance: 390 ½-392***, 407 ¾-411 ¾****

Pivot: 383-385

Support: 375-377 ¾***, 365-365 ¾****


Feel free to contact Oliver with any questions or comments

Call or Text: 312-837-3938

Email: [email protected]

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Soybeans (March)

Fundamentals: Last week’s signing of Phase-1 was a classic buy the rumor, sell the news response. The substance in the trade deal remains suspect in our eyes. China has stated several times that imports will be based on market conditions, ie: supply/demand and price (same as before). Soybeans are working back towards the low end of the range in the early morning trade as the life-threatening Coronavirus spreads in China. Friday’s Commitment of Traders showed funds bought 6,036 contracts through January 14th, putting them net long 3,185 contracts.

Techncials: The market tested and held our technical support pocket perfectly last week, a pocket that we had defined as 920-922 ¾. In our weekend report we talked about this being a spot to reduce short exposure. If you want to be on the long side, try to remain patient for a dip down to 912-916. This pocket represents the gap from December 12th and 13th.

Bias: Neutral/Bearish

Previous Session Bias: Bearish/Neutral

Resistance: 950 ½-955***, 968 ½-970****

Pivot: 933 ¾-937 ¼

Support: 920-922 ¾***, 912-916****


Chicago Wheat (March)

Fundamentals: Chicago wheat futures managed to rally back on Friday as funds defend their net long position. Friday’s Commitment of Traders report showed funds have a net long position of 29,787 contracts. Funds are net long 7,935 Kansas City wheat contracts.

Technicals: Wheat has been resilient, and the chart remains constructive, but we are still leaning on the short side, from a risk/reward perspective. 575-578 ¾ continues to be a resistance pocket we like selling into but keeping a tight leash on it above that pocket.

Bias: Bearish/Neutral

Previous Session Bias: Bearish/Neutral

Resistance: 575-578 ¾***, 585**

Support: 554 ½-557 ¼***, 536 ¼-538 ¾***


Kansas City Wheat (March)

Technicals: Kansas City wheat futures rallied back on Friday but are struggling to find follow through in the early morning trade. We have had a bullish tilt in our bias for the better part of the last $1 rally, but we are starting to ratchet that optimism back. 498-500 is firs resistance, if the bulls cannot achieve consecutive closes above here, we could see the market retreat towards 470, an area where we would look to be buyers again.

Bias: Neutral

Previous Session Bias: Neutral/Bullish

Resistance: 498-500**, 509 ¾-513***

Pivot: 488 ½-490 ½

Support: 470-471 ¾****, 453 ¾-458 ¾***


Cotton (March)

Technicals: Cotton futures are starting to feel jittery at these levels and are threatening to breakdown below our pivot pocket near 70.50. If the bulls fail to defend this level this week, we could see a further retracement. First meaningful support below the 70 handle is 66.93-67.13.

Bias: Neutral

Previous Session Bias: Neutral

Resistance: 72.34-72.80****

Pivot: 70.50

Support: 66.93-67.13***, 62.81-63.73***

Feel free to contact Oliver with any questions or comments

Call or Text: 312-837-3938

Email: [email protected]

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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.