(A video breakdown of the grain and livestock markets)
Fundamentals: December corn futures managed to rally off the lows yesterday as funds looked to cover shorts ahead of the weekend and month-end. Export sales yesterday morning came in at 549,100 metric tons, up 29% from the 4-week average. Though this was a step in the right direction, the bull camp needs to see higher numbers become a lasting trend. Winter weather continues to be a concern, we are a little surprised we aren’t seeing more of a premium in the market with funds holding a good size net short position.
Technicals: Despite being softer yesterday morning, we moved our bias to outright bullish, on positive chart developments. Yesterday’s early morning weakness was followed up by a slow grind higher through the day, making for a very constructive session. The market is having trouble finding new buyers in our first resistance pocket, we have defined that as 390-392 ¾. A close above here would open the door for a run back at 400-402 ½. This pocket is psychologically significant, but it also contains the 100 and 200 day moving average, the October 14th highs, and other previously important price points. Though we’ve been trending sideways for the better part of the last month, we remain optimistic on prices over the intermediate term.
Previous Session Bias: Bullish
Resistance: 400-402 ½***, 412 ¾-417 ¼****
Pivot: 390-392 ¾
Support: 377-381 ½ ****, 363-366***
Fundamentals: Soybeans were under pressure to start yesterday’ session but managed to find their footing into the afternoon. That momentum has spilled over into a slightly firm overnight and early morning trade. Export sales yesterday morning came in at 943,600 metric tons, down 39% from the 4-week average. Though down from recent weeks, it was still near the top end of estimates. Winter weather moving through the Midwest is a huge concern for those who have harvest to finish. Trade talks and optimistic headlines haven’t amounted to anything over the last year, but the lingering possibility, though a small percent, is helping to offer some support to the market. We continue to believe that we won’t get anything done until closer to the U.S. election.
Technicals: In yesterday morning’s report we moved our bias to outright bullish as prices fell into our support pocket from 921-928 ½. This pocket represents a key retracement, the 200-day moving average, and other previously important price points, including the secondary breakout point from October 1st. The bulls not only need to defend that but they now need to see consecutive closes above 940-941 ½. That would open the door for a potential retest of resistance from 953-959 ½, the recent highs as well as the highs from June.
Previous Session Bias: Bullish
Resistance: 953-959 ½****, 973 ¼-979 ¼***
Pivot: 940-941 ½
Support: 921-928 ½***, 899-906 ¾ ****
Chicago Wheat (December)
Fundamentals: Chicago wheat took a hard hit yesterday, much of what was likely technical selling. Export sales yesterday morning came in at 493,800 metric tons, up 31% from the 4-week average. Broad based money flow in grains set the tone for wheat, a softer morning followed by a rebound into the afternoon.
Technicals: We have had 4-star support listed as 500-506 ¼ for the last few weeks, nothing that “If you’re bullish Chicago wheat, this is a pocket where you might find value, on the first test.”. The market tested and held exactly how the bulls want to see it, a springboard higher. The big hurdle for the bull camp comes in at 515-518½. If the bulls fail to reclaim ground above here, we could start to see a bearish head and shoulders pattern.
Previous Session Bias: Neutral
Resistance: 525 ¾-531 ½**, 538 ¼-543****
Pivot: 515-518 ½
Support: 500-506 ¼****, 485 ½-489 ¼***
Kansas City Wheat (December)
Technicals: Kansas City wheat futures held technical support nearly perfect yesterday; we had defined that as 408 ½-409. This pocket represents the 50-day moving average and trendline support from the contract lows. We noted that this is the spot to start getting more aggressive if you’re bullish. The bulls MUST continue to defend yesterday’s lows, a retest and close below would neutralize our bullish bias. The market has snapped back into our pivot pocket from 415 ½-420. Consecutive closes above here opens the door for a run back at 437-439 ½.
Previous Session Bias: Bullish/Neutral
Resistance: 437-439 ½***, 454-457 ¾****
Pivot: 415 ½-420
Support: 408 ½-409****, 397-400***, 380*
Technicals: The market tried to work higher yesterday but failed against the previous day’s highs. In yesterday’s report we noted that a failure could lead to a deeper correction with first support coming in from 62.91-63.39. We remain optimistic on prices but feel there is better value below where we are currently trading, 64.64.
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.