Corn Futures (March)
Fundamentals: Corn futures took a dive on Friday, muting the momentum that had built up in the first half of the week. Tensions between the U.S. and Iran have sparked concern that it may derail the signing of Phase-1 with China next week because China and Iran recently completed joint military exercises. We think that the recent rise in tensions will have little effect on trade with China. Last week’s ethanol report showed production at 1.066 million barrels per day, down from 1.083mb in the previous week. Export sales last week were lackluster at 540,000mt. The big-ticket item this week will be Friday’s USDA report, where we will get a look at final production, grain stocks, and supply & demand. We will have estimates out in the coming days.
Technicals: Friday’s move lower was disappointing, to say the least. The previous day’s session (Thursday) was extremely constructive and looked poised to take us into a technical short-covering rally ahead of this week’s USDA report. Then headline risk derailed it, moving our bias from outright Bullish to Neutral/Bullish. 385 is our pivot point, the bulls need to defend this to start the week. A failure and close below here could take us to re-fill some gaps from the middle of December. Resistance remains intact, we see that as 390 ½-392. 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.
Previous Session Bias: Neutral/Bullish
Resistance: 390 ½-392***, 407 ¾-411 ¾****
Support: 377-381***, 365-365 ¾****
Fundamentals: Soybeans took a tumble on Friday as US/Iranian tensions rose, prompting some profit-taking on concerns it could throw a wrench in trade negotiations with China. We don’t see that as a probability (always a possibility), but it was a good excuse for longs to capitalize on a 75-cent rally in December, heading into an unknown USDA report this week. That report will be out on Friday morning, we will have estimates for you in the coming days. Last week’s holiday postponed the weekly Commitment of Traders report, which will be released this afternoon.
Technicals: The market retreated on Friday, breaking below our pivot pocket which led to accelerated selling towards our first support pocket, 933 ¾-937 ¼. Though we have our bias set at Neutral, the bulls still have the technical advantage, so long as they continue to defend this pocket on a closing basis. A break and close below could take us towards 921-924 ¼. This pocket represents a key retracement, along with the 100 and 200 day moving average.
Previous Session Bias: Neutral
Resistance: 968 ½-970****
Pivot: 950 ½-955
Support: 933 ¾-937 ¼***, 920-922 ¾****
Chicago Wheat (March)
Fundamentals: Export sales last week came in at 333,300 metric tons, towards the low end of expectations. Due to last week’s holiday, the weekly Commitment of Traders report will be released this afternoon, estimates suggest funds are net long roughly 30,000 contracts. The main event this week comes on Friday, in the form of a USDA report. We will have estimates for you in the coming days.
Technicals: The market pulled back last week, finishing right in our pivot pocket, 554 ½-557 ¼. The trend of higher lows and higher highs remains intact, so long as the bulls can defend 536 ¼-538 ¾ on a closing basis. This was a breakout point from December 16th, then became support near Christmas time. Significant resistance remains intact from 572 ¼-573 ½, this pocket represents the double top highs from June.
Previous Session Bias: Neutral
Resistance: 572 ¼-573 ½***
Pivot: 554 ½-557 ¼
Support: 536 ¼-538 ¾***, 527-529 ¼****