Traders Waiting For Data To Confirm China Ag Purchases

December 16, 2019 08:43 AM
March corn futures rallied hard in the back half of last week
Soybean futures rally despite Phase 1 Ag purchases still not clear
Proof of Ag purchases should start showing up in the data
Grain futures market update

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Corn Futures (March)
 

Fundamentals: March corn futures rallied hard in the back half of last week which has carried over into early morning momentum. Much of the relief has come on the back of broad-based buying in the grain sector as the US and China have come to an agreement on a Phase-1 trade deal, yet to be signed and implemented. This news has sparked a round of short covering from funds. Friday’s Commitment of Traders report showed funds sold 29,664 contracts through December 10th, expanding their net short position to 114,801. The positive developments coupled with fund's short positions prompted us to move our bias on Friday from Neutral, to Neutral/Bullish.

Technicals: The market finished Friday’s trade right at technical resistance, we had defined that as 381 ¼-382 ¾. If the bulls can achieve consecutive closes above here, it could spark additional short covering and take us closer to the psychologically significant $4.00 handle. Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each day.

 

Soybeans (January)

Fundamentals: Soybeans skyrocketed higher on Friday but closed well off of the highs as details around the Phase 1 trade deal led to confusion. The market is trading against those highs in the early morning trade as some of the details have been ironed out over the weekend. The US has agreed to cancel December 15th tariff hike deadline and reduce current tariffs, China has agreed to buy 40-50 billion in US ag products over the course of two years (this was originally reported as just 2020). Friday’s Commitment of Traders report showed funds sold 13,509 contracts through December 10th, expanding their net short position to 112,528 contracts.

Technicals: 909 ½-913 is our pivot pocket, if the bulls can defend this pocket, we could see an extension towards 928 ½-930 ¼. This pocket represents a key retracement and a gap from November 8th. A failure to maintain this strength could lead to a retracement lower to fill the gap, that comes in from 897 ¾-901 ½. Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each day.

 

Chicago Wheat (March)

Technicals: The market is marching higher in the early morning trade, thanks in part to broad-based buying in the grain sector. The market looks poised to retest the November 29th highs at 546. If the bulls can chew through this resistance, we could see an extension towards the double top highs in June, 573 ½.

Bias: Neutral

Previous Session Bias: Neutral/Bearish

Resistance: 544-546 ½****, 572 ¼-573 ½***

Pivot: 533

Support: 525 ¾-529 ¼****, 515 ¼-518 ¾***

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