Fundamentals: December corn futures were softer to start the week as the lack of bullish headlines coupled with harvest pressure was too much for the bulls to overcome. Crop Progress was released after the close, showing corn conditions unchanged at 58% good/excellent. Harvest is said to be 52% complete, this is 2% behind expectations and 23% behind the five-year average. On deck is the weekly ethanol report and exports, but traders will quickly move past that and look to Friday’s WASDE report as the big-ticket item. Early estimates are yields to be near 167.2 bushels per acre, down 1.2 from the previous report. Production estimates are coming in near 13.604 billion bushels, down from 13.779 in last months report.
Technicals: Yesterday’s move lower wasn’t what the bulls wanted to see, but not all hope is lost. Technical support remains intact and we feel that it still represents a good value, we have defined that pocket as 377-381 ½. A close below here would not only neutralize our bias, but it would be near term bearish too, opening the door for a potential retest of the mid 360’s. On the resistance side of things, the bulls NEED to see consecutive closes back above 390-392 ¾ to encourage short covering from the funds.
Previous Session Bias: Bullish
Resistance: 390-392 ¾***, 400-402 ½***, 412 ¾-417 ¼****
Support: 377-381 ½ ****, 363-366***
Fundamentals: January soybean futures managed to hold their ground yesterday, despite weakness in corn and wheat. We noted in yesterday’s interview with RFD-TV that the fundamental backdrop and money-flow has continued to be better for soybeans. Yesterday’s Crop Progress report showed that harvest is now 75% complete, inline with expectations and just 12% behind the five-year average. Attention will now turn to Friday’s WASDE report. Early estimates for yield come in near 46.6 bushels per acre, down from 46.9 in the previous report. Production is estimated to be at 3.512 billion bushels, down from the 3.550 in last months report.
Technicals: The technicals for soybeans remain very constructive in the near term, so long as the bulls can continue to defend technical support, defined as 921-928 ½. A close below here would neutralize our bias but would not be enough to flip to bearish. Our pivot pocket from 940-941 ½ was tested yesterday but the bulls could not find the buyers to achieve a conviction close above. If the market can close above this pocket, we could see a swift run at the recent highs (also the June highs) near 960.
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 futures were under pressure yesterday due to technical selling and a lack of new bullish news on the wires. Yesterday’s Crop Progress report showed the winter wheat crop is 89% planted, 2% behind expectations but 6% ahead of last year’s pace. Crop conditions came in at 57% good/excellent, 1% better than expectations.
Technicals: The market is failing to reclaim ground above our pivot pocket from 515 ¼-517 ¼. We have noted over the last week that a failure here could be the beginning of a bearish head and shoulders pattern. This week will be very important for the setting the tone on the technical landscape going forward.
Previous Session Bias: Neutral
Resistance: 525 ¾-531 ½**, 538 ¼-543****
Pivot: 515 ¼-517 ¼
Support: 500-506 ¼****, 485 ½-489 ¼***
Kansas City Wheat (December)
Technicals: Kansas City wheat futures were little changed yesterday, keeping the momentum alive for the bull camp. The 100-day moving average comes in near 430, but the more significant resistance pocket we see comes in from 437-439 ½. On the support side of things, the bulls need to defend the pivot pocket at 420. A break below could lead us to retest the trendline near 410.
Previous Session Bias: Bullish/Neutral
Resistance: 437-439 ½***, 454-457 ¾****
Support: 410-413****, 397-400***, 380*
Technicals: Cotton futures Traded lower yesterday, taking prices near our 4-star technical support pocket, 62.91-63.39. We have been writing about being patient for a pullback and using this pocket as an opportunity to consider buying. If the market can work a little more into our pocket and hold it on a closing basis, we will likely move our bias to outright bullish. A break and close below this pocket would neutralize our bias for the near term.
Previous Session Bias: Neutral/Bullish
Resistance: 65.85-66.05****, 68.35-68.60***
Support: 62.91-63.39****, 59.58-60.79***, 56.59-57.55****
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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.