Grains round-up: This grain's chart is a technical graveyard

December 29, 2017 10:27 AM

Corn (March)

Yesterdays Close (Thursday, Dec. 29):  March corn futures finished the day 1-1/2 cents lower, trading in a range of 3-1/2 cents on the session.  Funds were estimated sellers of 4,000 contracts.

Fundamentals:  Export sales came in at 1,245,500 metric tons, this was above the top end of expectations.  Yesterday’s ethanol production report was another good one, in fact it was the second highest on record. Ethanol production rose 13,000 barrels to 1.090 million barrels per day; we also saw ethanol stocks drop slightly. Despite a string of strong ethanol numbers, the market is still toward the low end of the range which makes you wonder where we would be if it wasn’t for ethanol. Weather in South America has perked up which has helped planting progress press towards last years pace and the average pace. Argentina is estimated to be 70% complete. 

Technicals:  The market failed to get follow through “momentum” yesterday after trading six consecutive sessions higher. Seven cents in six sessions is less than impressive, and with the low volume it looks like an opportunity for sellers to become more active. Our technical resistance comes in from 354-1/4-355-1/4 this morning. This represents the recent highs and the 50-day moving average.  The bears remain in control until we see a move above here to neutralize things. Consecutive closes above could encourage some short covering towards 361-3/4. On the bottom side, first support comes in from 345-3461/2. A break and close below opens the door to 335.

Bias: Bearish

Resistance: 354 ¼-355 ¼***, 360-361 ¾***, 375****

Support: 345-346 ½**, 334-335 ¼***, 323-325 ¼**

Soybeans (March)

Yesterdays Close: March soybean futures closed 10-1/4 cents lower yesterday, trading in a range of 12-3/4 cents on the day.  Funds were estimated sellers of 7,500 contracts on the day.

Fundamentals:  Export sales came in at 974,700 metric tons, this was within the expectations.  Weather in South America has and will continue to be a key catalyst to start 2018. Some areas have received better than expected weather which has given producers the ability to play catch up.  Soybean plating in Argentina is now on pace with last year and gaining ground on the average pace; they are estimated to be 85% complete.  Average analysts for Brazilian bean production are near 112 mmt with estimates ranging up to 4mmt on either side.  Many market participants will be looking forward to the January 12th USDA report will we will get some final reads for US production.

TechnicalsThe chart is a technical graveyard, there is really no other way to put it. The damage over the past three weeks leaves a lot of hurdles for the bulls to overcome. The significant pocket they need to get back out above comes in from 980-¼ to 985-½. On the support side of things, there is minor technical and psychological support from 950-952-¼.  If that gives way we will see funds expand their short position and press prices towards 937-½. The RSI (relative strength index) is currently at 35, which is more neutral than anything considering the big decline we’ve seen. We still have a bearish bias on the market, but for those of you wanting to play on the buy side you could consider call options; they are relatively cheap and get you through the Jan. 12 USDA report without worries of getting stops gunned down.

Bias: Bearish

Resistance: 967 ¾**, 980 ¼-985 ½***, 999-1004**

Support: 950-952 ¼***, 937 ½***, 922 ¼****

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About the Author

Oliver Sloup is Vice President of Blue Line Futures, a leading futures and commodities brokerage firm. Oliver has over a decade of trading experience and has been a guest on CNBC, Bloomberg and RFD TV among others.  Prior to Blue Line Futures, Oliver worked as the Director of Managed Futures at iiTRADER.