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Blue Line Morning Express (Grains)

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CORN (December)

Session Close: December futures saw their biggest one-day gain in nearly two months with futures trading up 6 cents on the session. Funds were estimated buyers 15,000 contracts.

Fundamentals: The expectation/anticipation for yesterdays weekly crop progress report prompted some short covering to start the week. Corn harvest came in at 38% complete, this was only up 10% from the previous week. Many analysts were looking for a number closer to 44% complete, the five-year average is 59%. There are only three states ahead of pace (all by single digits), those are Michigan +3%, North Carolina +1%, and Tennessee +4%. On the flip side there are eight states that are at least 20% behind the five-year average. Weather will continue to be monitored closely as farmers try to get beans and corn out of the fields. We will also keep an eye on developments in South America as Argentina and Brazil continue to roll through planting season. Export inspections yesterday morning came in at 614,075 MT, this was in line with the estimated range from 500-800 MT and well above last weeks dismal read of 330 MT.

Technicals: The market had contract lows in sight, but the bears could not attract any more sellers to help break down the market technically. The inability to breakdown the market prompted short covering from funds who have a large net short position for this time of year. Technical resistance comes in at 353 this morning, this represents the 50-day moving average, an indicator that we have not seen the market close above since July. If the bulls can achieve a close above, we could see additional short covering over the near to intermediate term. The next resistance pocket comes in from 360-362 which represents the top end of the range over the last two months as well as a key Fibonacci retracement.

Bias: Neutral

Resistance: 350-353 **, 360-362***, 372-375**

Support: 342 -344 **, 334-335 ***

SOYBEANS (November)

Last weeks close: November soybeans closed 1 cents higher yesterday, a laggard in the grain complex. Funds were estimated to have been buyers of 4,000 contracts on the session.

Fundamentals: The market was somewhat subdued yesterday compared to corn and wheat as analysts weighed the impact of recent weather. Yesterdays crop progress report showed that beans are now 70% harvested, this is a big jump from last weeks report which showed harvest 49% complete. This now puts farmers just 3% behind the five-year average pace. The major laggards are Iowa -20% and Nebraska -16%. Sticking with weather and percentages, South America continues to roll through their planting season. Mato Grosso is estimated to be 26% complete with their planting, this is on pace with their average year. We will continue to keep an eye on weather in both Brazil and Argentina and update you when warranted. Export inspections yesterday morning came in at 2.562 MMT, this was well above the expected range from 1.300-1.900 MMT and is above last weeks 1.786 MMT.

Technicals: Soybeans were trading lower Sunday night but founds support in our pocket from 975 -977. This has been a big pocket for the last month (Both support and resistance) and will continue to be until otherwise noted. This represents the 50% retracement from the June lows to the July highs. It also represents the 200-day moving average, which if youve picked up on it over the last few weeks in our reports it has been essentially flat. The market is testing that support pocket again this morning, if the bears are able to open the gates below, there is not a lot of support until 967 with several other indicators town to 960 . Within this 7-cent pocket we have the 50 and 100 day moving average, trendline support from the august lows, and a key Fibonacci retracement. If bulls can defend 975 -977 we would expect to see funds extend their long position and press prices back towards 993 .

Bias: Bullish

Resistance: 993 **, 999 -1003 **, 1014****

Support: 975 -977***, 965 -967**, 960 -962****, 939 **

WHEAT (December)

Last weeks close: Wheat futures were the shining star yesterday, finishing the day up 10 cents. Funds were estimated to have been buyers of 7,000 contracts on the day.

Fundamentals: Although there was fundamental news on the wire yesterday, it would be a disservice to try and make a story to support yesterdays rally which was more short covering than anything in our mind. Export inspections yesterday morning came in at 169,750 MT, this was below the estimated range of 300,000-500,000 and was also below last weeks 325 metric tons. The Monday afternoon crop progress report showed winter wheat is 75% planted, this is a 15% increase from last week and ahead of what analysts were expecting. The big laggards are Kansas -19% and Oklahoma -13%.

Technicals: Yesterdays rally had extended on the overnight trade, but the market has been halted against key technical resistance. The 50-day moving average is a simple indicator that carries a lot of weight in this wheat market. That comes in at 440 and will act as key resistance, we have not seen the market close above this indicator since July. If the bulls can achieve a close above, we could see additional short covering from the funds. Until then, the bears remain in control as they have managed to force lower highs and lower lows upon the market over the past several months.

Bias: Bearish

Resistance:440 -442 ***, 462 **, 478-479****

Support: 422 ****, 415 **, 399-402 ****

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

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About the author

Oliver Sloup is Vice President of Blue Line Futures, a leading futures and commodities brokerage firm located at the Chicago Board of Trade. Blue Line Futures mission is to put the customer first, and that means bringing YOU the best customer service, consistent and reliable research and state of the art technology.  Oliver has been a guest on CNBC and Bloomberg, among others.  Oliver has over a decade of trading experience. Prior to Blue Line Futures, Oliver worked as the Director of Managed Futures at iiTRADER.



Contributing author since 10/6/17 

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