Fundamentals: Corn futures were mute yesterday as the market ran out of new news to break prices out above technical resistance. Today is the signing of the highly anticipated Phase-1 trade agreement. It will be nice to get some clarity on the “trade deal”, but I wouldn’t hold your breath for something magical to happen. My guess is that Phase-1 is largely an agreement to proceed to Phase-2. February option expiration is next week and there is a lot of open interest between 385-390 on puts and calls, this may keep corn stuck for the next week and a half.
Technicals: Corn futures are struggling against technical resistance, we had that defined as 390 ½-392. This pocket represents the top end of the range trough December, as well as other previously important price points. If we see consecutive closes above here, we believe there is room for a short squeeze, despite any fundamental backdrop. With that said, this is the top end of the range and we have been working with clients to reduce exposure here....For the full report, sign up for your FREE two-week trial!
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Fundamentals: Soybean futures have been battling against technical support for the last week and a half. Hopes of a meaningful Phase-1 signing today has kept a floor in the market, but we would not be surprised to see that fall flat. It will be nice to get some clarity on the “trade deal”, but I wouldn’t hold your breath for something magical to happen. My guess is that Phase-1 is largely an agreement to proceed to Phase-2. Keep in mind that we rallied nearly 75-cents in December, much of that in anticipation of Phase-1, setting up for an over-promise, under deliver scenario.
Technicals: Our technical support pocket from 933 ¾-937 ¼ has been tested each of the last nine sessions. The inability to bounce off support should be a caution flag for the bull camp. A break and close below support opens the door for a potential drop to 920-922 ¾. This pocket represents a key retracement, the 200-day moving average, and several previously important price points. Yesterday we moved our bias from Neutral to Bearish/Neutral....For the full report, sign up for your FREE two-week trial!
Chicago Wheat (March)
Fundamentals: Chicago wheat futures made new highs, for the move, but we still don’t see much value in prices at these levels. The Phase-1 trade deal, being signed today, may have some bearing on price action. Some are hopeful that wheat will be included on ag purchases. It will be nice to get some clarity on the “trade deal”, but I wouldn’t hold your breath for something magical to happen. My guess is that Phase-1 is largely an agreement to proceed to Phase-2.
Technicals: The market has worked higher, hunting for stops above the double-top highs from June. We still think the risk/reward favors the sell-side here in the near term. On top of being against technical resistance, the RSI is nearing overbought conditions, 69.64. On the support side....For the full report, sign up for your FREE two-week trial!
Kansas City Wheat (March)
Technicals: KC Wheat futures made new highs yesterday which has carried over into some moderate strength in the early morning trade. Psychologically significant resistance comes in at the $5.00 handle. If we can achieve consecutive closes above this pocket, we would look for a swift move towards 509 ¾-513. Keep in mind that the RSI is at 71.64, technically “overbought”. The longer-term target for the bull camp is 545, this would be a full retracement to the June highs. On the support side....For the full report, sign up for your FREE two-week trial!
Techncials: Cotton futures are giving up some gains in the early morning trade as bullish participants look to book gains ahead of the Phase-1 deal signing, a classic buy the rumor, sell the news scenario. Our meaningful resistance pocket remains intact from 72.34-72.80, this is the breakdown point from last May. On the support side of things, the bulls need to....For the full report, sign up for your FREE two-week trial!
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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.