Fundamentals: Corn futures rallied to start the week, Sunday night, but failed to find follow-through momentum when we got more participation on the floor open. The Sunday night strength was largely on the expectations of a drop in crop progress, giving us a scenario, we talked about in our interview with RFD-TV yesterday; buy the rumor, sell the fact. Good/Excellent conditions dropped 2% to 62%, in line with most expectations (2-3% drop). Looking at crop conditions this late in the game may be a fool’s errand, the crop is all but made. To put things into context, the 17-year average (dating back to 2004) Good/Excellent conditions on September first is 61% (this fun fact is courtesy of our good friend Ken Morrison).
Technicals: The market poked its head above our 4-star resistance yesterday, a pocket that we have had 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. The inability to maintain strength above this pocket, coupled with an RSI nearing extreme levels, led to a round of profit-taking from recent buyers. We like leaning on the short side against these levels so long as the Bear camp can continue to defend that pocket on a closing basis. A breakout above would neutralize our bias.
Previous Session Bias: Neutral/Bearish
Resistance: 373-377 ¼***
Pivot: 359 ½-363 ¼
Support: 343 ¾-346****, 326-330***
Fundamentals: Soybean futures jolted higher to start the week as concerns of hot and dry weather through the Midwest. Analysts were expecting a drop of 3-4% in Good/Excellent conditions, something that the market was clearly pricing in on Sunday night. We mentioned in our interview with RFD-TV interview yesterday that this could set up for a buy the rumor, sell the news event for soybeans, which seemed to play out in the overnight session. Good/Excellent ratings yesterday afternoon was reported at 66%. Though weather is more important for soybeans at this juncture, we are in line with historical averages. To put things into context, the 17-year average (dating back to 2004) Good/Excellent conditions on September first is 60% (this fun fact is courtesy of our good friend Ken Morrison).
Technicals: The market reversed when we got more participation on the floor open, yesterday morning. A sign that things could be getting a little toppy, not to mention the RSI is at 75.72, the most overbought it has been for this contract. Near term resistance comes in from 968-970. A break and close above this pocket could extend the rally to our next resistance pocket, 980-982 3/3. Our pivot pocket is 950-952, a break and close below could spark a round of profit-taking from recent buyers, the next support pocket does not come in until the breakout point from last week, 923-925 ¼.
Previous Session Bias: Neutral
Resistance: 968-970**, 980-982 ¾****
Support: 923-925 ¼****, 905 ½-911 ½****
Chicago Wheat (December)
Technicals: Chicago wheat futures ran stops above the recent highs, but failed to maintain that strength, finishing the day closer to unchanged. Our pivot pocket remains intact from 554 ½-557 ½. This is an inflection point; a breakout above could spark an extension of the rally. A break and close below could spark some profit-taking. Needless to say, the next few sessions will be telling for the near-term price action.
Previous Session Bias: Neutral/Bearish
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.