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Fundamentals: Corn futures are launching higher this morning as short covering continues. Market participants were expecting to see more material moisture over the weekend for parts of the Midwest that need it. Analysts are expecting to see Good/Excellent ratings drop another 2-3% in this afternoon’s crop progress report. Friday’s Commitment of Traders report showed funds bought back 49,000 contracts, trimming their net short position to 61,489. Fund buying at the end of late August as far from normal but fits right into the 2020 bingo card.
Technicals: The markets are working higher in the overnight and early morning trade as the momentum continues to feed on itself. If the Bulls can finish positive today, it would market the eighth consecutive session with a higher close. That momentum has brought the RSI (relative strength index) up near 75, easily the most overbought level for this contract. Our technical resistance pocket is being threatened this morning, we have had that defined as 359 ½-363 ¼. This pocket represents the 200-day moving average, a key retracement, and the top end of the range from July.
Previous Session Bias: Neutral/Bearish
Resistance: 373-377 ¼***
Pivot: 359 ½-363 ¼
Support: 343 ¾-346****, 326-330***
Fundamentals: A generational storm that swept through Iowa, followed up by hot and dry weather has spurred a monster rally over the last two weeks. Analysts are expecting this to result in another decline in crop conditions. Good/Excellent conditions are expected to drop another 3-4% in this afternoon’s weekly crop progress report.
Technicals: November soybean futures are continuing to surge higher as we are roughly a dollar off the lows from just three weeks ago. The breakout move above 923-925 ¼ last week accelerated the momentum; in last week’s report we noted that: a break and close above resistance (923-925 ¼) could spark a whoosh higher, with little technical resistance until the 960s.”. As one would expect, the swift move higher has brought the RSI (relative strength index) near 80, the most overbought for this contract.
Previous Session Bias: Neutral
Resistance: 968-970**, 980-982 ¾****
Support: 923-925 ¼****, 905 ½-911 ½****
Chicago Wheat (December)
Fundamentals: Chicago wheat futures continue to be the beneficiary of spillover momentum from fund buying in corn and soybeans. Friday’s Commitment of Traders report showed funds bought roughly 14,000 contracts, putting them net long 1,517. A softer US Dollar has also helped offer some support to wheat as it makes it more competitive on the global scale.
Technicals: Chicago wheat futures are now at their highest price since April as momentum continues to build. Though we do not like wheat here from a fundamental standpoint, the technicals remain strong. If the Bulls can maintain strength through today’s session, we could see the market make a run towards 577 ½-581 ¼. The RSI (relative strength index) is at 66.20, not yet in “overbought” territory but certainly near the top end of the range.
Previous Session Bias: Bearish/Neutral
Resistance: 560 ½**, 577 ½-581 ¼****
Pivot: 554 ½-557 ½
Support: 540-542 ½**, 526 ½-530***, 518**
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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.