Fundamentals: March corn futures finished yesterday’s session near unchanged after defending technical support early in the day. Yesterday’s weekly export inspections came in at 346,000 metric tons, below the low end of estimates. With little new news on the wire, technicals and money-flow is our leading catalyst for near term price action, that includes this week’s option expiration. There are roughly 22,000 open calls at the 390 strike, this could keep a lid on prices by the end of the week.
Technicals: The market retreated on yesterday’s open but found support in our pivot pocket, we defined that as 383-385. The inability to breakdown below offered an opportunity for moderate short-covering from sellers, late Friday. The market is right back up against technical resistance, 390 ½-392. A conviction close above this pocket would likely spur additional short covering from funds, but we are not sure that will be able to be accomplished this week.
Previous Session Bias: Neutral
Resistance: 390 ½-392***, 407 ¾-411 ¾****
Support: 375-377 ¾***, 365-365 ¾****
Fundamentals: March soybean futures broke lower yesterday on what was largely technical selling. Yesterday’s weekly export inspections report came in at 1,199,000 metric tons, this was at the top end of expectations and a notch above last weeks, 1,149,000 metric tons. Weather in South-America has been favorable for crop development and harvest pressure could start to pick up.
Technicals: In yesterday’s report we talked mentioned: “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”. We have achieved the meat of those prices which we believe offers value on the first test. A break and close below this pocket would neutralize our bias. Previous support at 920-922 ¾ now becomes first resistance.
Fundamentals: Wheat futures continue to march higher on the back of a strong basis and thoughts of a better supply/demand ratio to come. Yesterday’s weekly export inspections were nothing to write about, coming in within the range of estimates at 435,000 metric tons.
Technicals: The market took out resistance yesterday and is seeing follow through again in the early morning trade, confirming that our desire to lean on the short side is currently dead wrong. We were working with clients to reduce short exposure yesterday and will be looking for a spot to give it another shot when we see technicals start to take a breather. The RSI (relative strength index) is currently at 72.85, this is the most overbought this contract has been.
Previous Session Bias: Bearish/Neutral
Resistance: 598-601 ¾***
Support: 575-578 ¾***, 554 ½-557 ¼***
Kansas City Wheat (March)
Technicals: Kansas City wheat futures continue to show signs of strength but are lagging the Chicago contract and having trouble breaking out above the psychologically significant $5.00 handle. If the bulls can chew through this area, we could see a swift move towards 509 ¾-513. The chart remains constructive and we believe there is more upside potential in KC wheat, but we want to see some near-term consolidation.
Previous Session Bias: Neutral/Bullish
Resistance: 498-500**, 509 ¾-513***
Pivot: 488 ½-490 ½
Support: 470-471 ¾****, 453 ¾-458 ¾***
Technicals: March cotton futures broke below the 70 handle yesterday which not only neutralizes the chart, but gives the bears a favorable risk reward set up here. If the bulls cannot reclaim ground and close back above 70.00-70.50, we could see the selling accelerate near term. First support comes in from 66.93-67.13.
Previous Session Bias: Neutral
Support: 66.93-67.13***, 62.81-63.73***
Feel free to contact Oliver with any questions or comments
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