Grain Traders Paring Long Positions After Coronavirus Seen Slowing Global Grain Demand

Grain futures market update

Grain futures market update

Corn Futures (March)

Breaking: Coronavirus fears created a risk-off (sell first, ask questions later) atmosphere on Friday and that has continued through the weekend and into the Monday morning markets. Nearly 3,000 people are infected with a mortality rate said to be around 3%. Nearly everything is under pressure, safe havens like gold and silver are catching a bid.

Fundamentals: Corn futures were little changed last week as there was little new news on the wires. Early this week, attention will be on money-flow with the coronavirus shaking up the global markets. We were looking for a softer open, but this is much more than we were anticipating which may have us tightening up long positions after the floor opens.

Technicals: Last week we talked about options expiration keeping a lid on prices at 390, then wanting to get long into this week’s trade. We were position long with clients into the weekend with hopes we would finally be able to breakout above the top end of resistance. The coronavirus fears and market reaction have obviously thrown a wrench into our near-term thesis.

Bias: Neutral/Bullish

Previous Session Bias: Neutral/Bullish

Resistance: 392-394 ¼***, 407 ¾-411 ¾****

Pivot: 383 ½-384 ¼

Support: 375-377 ¾***, 365-365 ¾****


Soybeans (March)

Fundamentals: Fears of coronavirus affecting demand and China on holiday this week has put the pressure on beans, breaking prices below the $9.00 handle with conviction. We underestimated the risk-off trade that the coronavirus has created. These headlines along with money-flow will be the leading catalysts this week.

Technicals: In our weekend update we talked about the market is at an inflection point near $9.00. We liked buying here on the first test, but the weekend headlines didn’t give the bulls a chance to defend support. The next support pocket comes in from 870-882 ¾, this pocket represents the low end of the range from August, September, and December.

Bias: Neutral/Bullish

Previous Session Bias: Neutral/Bullish

Resistance: 920-924***, 933 ¾-937 ¼***

Pivot: 899-902 ½

Support: 879-882 ¾****


Chicago Wheat (March)

Fundamentals: Wheat futures are taking it on the chin this morning as the risk-off trade ripples through the broader markets. We have been in the camp that wheat futures are overpriced as it is, so the headline risk could have a bigger impact on wheat. Friday’s Commitment of Traders report showed funds are net-long 41,671 contracts.

Technicals: The market broke into our support pocket on Friday and is breaking lower in the overnight/early morning trade. Our next support pocket comes in from 554 ½-557 ¼. We have been leaning on the short side and view this pocket as an area to reduce short exposure. If you have a bullish bias, you could consider buying here.

Bias: Bearish

Previous Session Bias: Bearish

Resistance: 573 ½-578 ¾***, 598-601 ¾***

Support: 554 ½-557 ¼***, 543-545 ¼**

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