Options Optimism for Corn Futures Fell Flat

April 27, 2020 08:25 AM
COT report showed funds were net sellers of grain contracts
Soybean futures buyers strike
Grain futures market update


Corn (July)

Fundamentals: We were optimistic on corn into option expiration, Friday, but that fell flat of expectations which led us to tighten things up into the weekend and look on the sell side for some clients. Last week we noted an open window for planting through the Midwest and that’s what we got over the weekend. Not to mention wet weather concerns will not carry the weight they once did, after last year’s performance during one of the wettest springs on record. The USDA's Crop Progress report will be out after the close, estimates are for corn to be 20-25% planted. Friday’s Commitment of Traders (COT) report showed funds were net sellers of 23,485 contracts, expanding their net short position to 161,057.

Technicals: Lower highs were marked last week, keeping the path of least resistance as lower. Are lower lows around the corner? We would not count it out. First support for the July Corn futures contract comes in from 316-317 ¾. A break below here takes us to retest the contract lows at 309. On the resistance side of things, the bulls have their work cut out for them. The first significant barrier comes in from 330-333. Consecutive closes above here would start to neutralize the chart, until then, the bears remain in control.

Bias: Neutral/Bearish

Previous Session Bias: Neutral/Bullish

Resistance: 330-333****, 343 ¼-344 ¾**

Pivot: 316-317 ¾ 

Support: 308 ¼-310*** 298 ¾-301 ¼**


Soybeans (July)

Fundamentals: July soybeans railed to hold ground into the weekend as market participants exhibited a buyers strike. Friday’s COT report showed funds sold a net 15,386 contracts, putting them net short 2,864 contracts. This is a neutral position for funds, which should be a little nerve racking for the bulls. If fundamentals don’t become more friendly, funds have powder to press the short side.

Technicals: Last Tuesday’s reversal was as encouraging as it gets, but Thursday’s reversal off the highs coupled with Friday’s collapse has muted that optimism in the near term. Support today comes in from 829-834. A close below here and we likely revisit the contract lows of 818 ½. Resistance comes in from 857-861 ¼. Consecutive closes above this pocket would Neutralize the chart, until then, the bears remain in control.

Bias: Neutral/Bearish

Previous Session Bias: Neutral/Bullish

Resistance: 857-861 ¼****, 871 ¼-875**

Pivot: 829-834

Support: 818-821***, 808 ¼***, 791**


Chicago Wheat (July)

Fundamentals: July Wheat futures broke down on Friday and are continuing to see pressure in the early morning trade as it seems bullish headlines exhausted themselves in the past weeks. The latest COT report showed funds were net sellers of 1,379 contracts, trimming their net long position to 24,001 contracts. We would not be surprised to see continued liquidation here in the coming weeks.

Technicals: Lower highs and lower lows continue to persist, keeping the Bears in control. First support today comes in from 520-525. This pocket represents the lows from April 17th and the breakout point from March 19th. A break and close below here opens the door for accelerated selling, potentially taking us back below the psychologically significant $5.00 handle. 

Bias: Bearish

Previous Session Bias: Neutral/Bearish

Resistance: 538-540 ½**, 552-554 ¾***, 562-565½****

Pivot: 520-525

Support: 506 ¼-512 ¼***, 491 ¾-494 ¼****

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.


About the Author

Blue Line Futures, is a leading futures and commodities brokerage firm offering discounted personalized service and futures and commodity research.