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Blue Line Morning Express (Grains)

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CORN (December)

Session Close: December corn futures closed 2 cents lower yesterday, trading both sides of unchanged in a 4 cent range. Funds were estimated sellers of 7,500 contracts on the day.

Fundamentals: Corn futures were under pressure in the back half of yesterdays session as better forecasts could lead to a rapid pickup in harvest activity over the next week to week and a half for many of the areas lagging. If forecasts change, we could see a small premium come back into the market, but we do not anticipate it being significant. Yesterdays weekly EIA report showed that ethanol production rose by 20,000 barrels per day, this puts us at 1.039 million barrels per day. Export inspections this morning came in near 1,255,00 metric tons this compares with the range of estimates from 800,000-1,200,000 metric tons and last weeks read of 1,254,868 metric tons. We are also keeping an eye on November option expiration tomorrow as open interest has the ability to act as a magnet. Majority of the open interest for puts and calls is at the 350 strikes, 11,275 calls and 16,247 puts. We would not be surprised to see prices end the week darn close to that 350 level so long as we dont see a significant change in OI over the next 24 hours.

Technicals: On the technical side of things, the market had some promise on the open yesterday. Prices managed to eclipse the 50-day moving average for the first time since July, clipping stops to 355 , but could not get additional momentum to encourage more short covering. The inability to stage a successful technical breakout led to moderate pressure throughout the rest of the session. Option expiration will likely keep the market in check for the remainder of the week but that doesnt mean we should take our eye off of the ball. If the market can achieve a close above the 50-day moving average, look for funds to elevate prices towards 360-362. A failure will likely lead to additional consolidation and a possible retest to the bottom end of the range from 342 -344 .

Bias: Neutral

Resistance: 352 -355 **, 360-362***, 372-375**

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

SOYBEANS (November)

Session Close: November soybean futures closed 1 cents lower (on the lows) after trading in an 8-cent range. Funds were estimated sellers of 4,500 contracts on the day.

Fundamentals: Soybean futures were trading on firm footing in the early morning trade but could not find any fundamental catalyst to support prices as the floor opened. Better weather over the next 7-10 days should be of benefit for producers who still need to get the crop out of the ground. Brazil weather also looks friendly as they have received a nice dose of rain in some areas that had been burdened by dry weather. Export sales this morning came in near 1,275,000 metric tons, this compares with the estimated range from 1,200,000-1,600,000 metric tons and last weeks read of 1,275,154 metric tons. November option expiration will be of interest as we look towards the weekend. There are roughly 10,500 open calls at the 960 strike. On the put side, 960 has the largest OI that is within reach. There are 22,875 open puts, this should offer a near term floor.

Technicals: The market looked strong in the early morning trade yesterday, but as we had mentioned, we wanted to see volume confirm price on the floor open and that did not happen, offering a nice opportunity for profit taking for longs. 975-977 has been tested and held (on a closing basis) each of the last three sessions, today would be the fourth. Technical support and resistance levels often get weaker the more times they are tested, think of a wrecking ball against a sky scrapper. The building will not go down with one blow, but several blows in a row shakes the foundation. We still have a bullish bias in the intermediate term but see prices consolidating down towards the 100-day moving average and trendline support from the August lows, this comes in from 966 -968 . Just below that support pocket is 960 -964 which is the 50-day moving average and a key Fibonacci retracement level. The bulls will remain in control until these support pockets are violated on a closing basis.

Bias: Bullish

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

Support: 975 -977**, 966 -968 ***, 960 -964****, 939 **

WHEAT (December)

Closing Session: December wheat futures closed 4 cents lower in a range of 9 on the day. Funds were estimated sellers of 2,750 contracts for the session.

Fundamentals: Yesterdays price action started out on a strong note, but the market could not find a fundamental catalyst to encourage additional short covering. Drier weather has offered an opportunity for producers in Kansas and Oklahoma to catch up on planting, as mentioned earlier in the week these were the two huge laggards. We know that big crops are expected globally which could add to already large stocks. Ukraines winter wheat plantings are estimated to be 94% complete with just about 350,000 million hectares left to go. Export inspections this morning came in at 615 tmt, this was above the estimated range from 300-500 tmt. Last weeks read came in near 615 tmt. Two weeks in a row of better than expected exports is just shy of a trend, but certainly something to note.

Techncials: As with corn, the market started off on stronger footing and managed to trade above the 50-day moving average for the second time since July. Unfortunately for the bull camp, they could not get additional momentum through the morning to encourage short covering from the funds. The market retreated off of the highs and ended the session near the lows. As mentioned yesterday, rallies are meant to be sold until we see a conviction close above resistance. Until that happens bears will remain in control and we would not be surprised to see the market consolidate down to the bottom end of the range and test the contract lows of 422 .

Bias: Bearish

Resistance:440-443***, 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.



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