Fundamentals: March corn futures finished yesterday’s session limit up, 25 cents. Expanded limits are in place today, 40 cents, it is doubtful that we see this hit. Despite trading locked limit, corn volume was at 640,244 contracts, the 2nd largest for a January report day. 2014 was roughly 5k contracts more. The big surprise in the corn market was a 3.8 bushel drop in yield, the largest drop for this report in at least 30 years. Much of the drop came from Iowa Minnesota and Illinois which means that August derecho had a bigger impact than the USDA previously thought. As far as some of the other data points are concerned, they were bullish, but we would not have guessed lock limit up bullish. Prices accelerated higher again in the overnight trade, marking prices not seen since 2013. Commercial shorts and producers could be getting squeezed here, adding fuel to the rally without the funds lifting a finger.
Technicals: As mentioned for the last month straight, finding meaningful technical resistance in this environment and in uncharted territory is a fool’s errand. We went into yesterday’s report with a Neutral/Bearish bias, aka cautiously pessimistic. We are keeping that intact in today’s report, do not confuse this with calling for a long-term top. Fundamentals and technicals are a bit conflicting, so managing risk and position size is something to consider as we expect volatility to remain high. A squeeze on the commercials is the biggest threat to the Bear camp.
Previous Session Bias: Neutral/Bearish
Pivot: 517 ¼-522 ¼
Support: 497-502 ¾**, 473-476***, 457 ½-462***
Fundamentals: Soybean futures made new highs again in yesterday’s session and saw some follow-through in the overnight session. At this morning’s intermission point, the market is back to unchanged, roughly 18 cents off the overnight highs.
Technicals: We probably sound like a broken record by now when we say that finding meaningful technical resistance in this type of environment is a fool’s errand. Pullbacks have been extremely shallow, a good indication/trademark of a Bull market. How much juice is left in the grape, that is the million-dollar question. The fundamental backdrop remains in place, and technical momentum has been undeniable, but the velocity of the move is the concern. Our bias remains Neutral, but there will be plenty of shorter-term trading opportunities on both sides.
Previous Session Bias: Neutral
Support: 1349 ½**, 1295-1301****, 1280 ½**
Chicago Wheat (March)
Technicals: Wheat futures surged higher yesterday and saw some follow-through momentum in the overnight trade, marking new contract highs at 680 ¾. In yesterday’s report we wrote about our pivot pocket from 637 ¾-639, stating: “ If the Bulls can defend the pivot pocket through today’s session, we could see prices continue higher.”. Higher highs and higher lows is the trend that keeps the Bull camp in charge. A break and close back below our pivot pocket could neutralize the bullish technicals.
Previous Session Bias: Neutral
Resistance: 680 ¾*
Pivot: 637 ¾-639
Support: 611 ¾-615 ¼****, 600-602 ½**
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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.