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Fundamentals: December corn futures started yesterday’s session under pressure but managed to find it is footing in the afternoon, finishing the day near unchanged. Hot and dry weather concerns are likely too little too late, throw in a wall of producer selling and that could limit the upward mobility from current prices. Strength in the soybean market has certainly helped bring support to corn futures, if soybeans run out of gas, we could start to see the selling in corn accelerate. This morning’s weekly export sales report showed net sales of 95,800 MT for 2019/2020 were down 65 percent from the previous week and 53 percent from the prior 4-week average. For 2020/2021, net sales of 2,389,100 MT primarily for China (1,155,000 MT), unknown destinations (569,000 MT), and Japan (343,600 MT).Next Friday we get an updated look at production numbers from the USDA, we will be compiling estimates over the weekend and provide that to you by Wednesday morning’s report.
Technicals: The market tried to break lower yesterday but failed to take out the Tuesday lows, a positive sign for the Bull camp. With that said, we continue to lean on the short side with clients who are looking to lay-off risk. 359 ½-363 ¼ is the inflection point and we believe represents a good risk/reward opportunity to the sell-side. A break and close above this pocket and we would look to take our medicine and move on to the next setup.
Previous Session Bias: Bearish
Resistance: 373-377 ¼***
Pivot: 359 ½-363 ¼
Support: 343 ¾-346****, 326-330***
Fundamentals: Soybean futures tried to break lower yesterday but rebounded to finish on the highs of the session, that momentum has carried over into the overnight/early morning trade. Hot and dry weather coupled with a string of friendly export data has encouraged fund buying, taking us back near the January highs. This morning’s weekly export sales report showed net sales of 88,100 MT for 2019/2020 were up 75 percent from the previous week, but down 57 percent from the prior 4-week average. For 2020/2021, net sales of 1,762,800 MT primarily for China (1,010,000 MT) and unknown destinations (526,000 MT).
Technicals: The market managed to defend our pivot pocket on a closing basis which has prices marching back higher, approaching our first resistance pocket from 968-970. The more significant resistance pocket does not come in until 980-982 ¾. This pocket represents previously important price points and a full retracement to the January highs. Our bias is Neutral/Bearish, a runup to this pocket would likely move us to outright Bearish on the first test. The RSI (relative strength index) is over 80, the most overbought reading we have seen for this contract. The chart remains friendly, but we do not think there is a lot of juice left in the grape.
Previous Session Bias: Neutral/Bearish
Resistance: 968-970**, 980-982 ¾****
Support: 923-925 ¼****, 905 ½-911 ½****
Chicago Wheat (December)
Fundamentals: This morning’s export sales report showed net sales of 585,400 metric tons (MT) for 2020/2021 were down 23 percent from the previous week, but up 4 percent from the prior 4-week average. Increases primarily for China (250,800 MT) and the Philippines (116,400 MT). The US Dollar is trying to stage a relief rally, if it is successful in doing so, we could see that put a headwind in commodities, including wheat futures.
Technicals: Chicago wheat futures reversed yesterday but managed to defend our pivot pocket, 554 ½-557 ½. If we break and close below this pocket, we would expect to see additional long liquidation take us back into the 540-542 ½ area.
Previous Session Bias: Neutral/Bearish
Resistance: 568 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.