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Have soybeans turned bearish?


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Blue Line Grain Express

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CORN (December)

Yesterdays Close: December corn futures closed 1 cents lower yesterday, trading in a range of 2 cents. Funds were estimated sellers of 7,000 contracts on the day.

Fundamentals: Corn futures have started the week reverting to its old ways, trading in a tight and narrow range. Export inspections yesterday morning came in at 376 metric tons, this was below the expected range from 500-700 metric tons and below last weeks read of 456 mt. Yesterdays harvest progress report showed that corn is 83% harvested, this was in line with analyst expectations but still behind the five-year average of 90%. We also got yesterdays updated commitment of traders report which showed funds are net short (futures and options) 202,456 contracts, this was an increase of 3,321. Keep in mind that this data is compiled through in the first half of the week and does not include Thursdays USDA report. Weather in South America looks to be mixed and unthreatening over the next week and a half.

Technicals: corn futures are continuing to drift lower and are just a few ticks away from posting new contract lows. The bears remain in control as we have been continuing to post lower highs and lower lows over the past two and a half months. The next technical support pocket comes in to 334-335 . On the resistance side of things, the bulls have a lot of work to do. 345 is the first line in the sand but the more significant levels are above that. The 50-day moving average is something we have been referencing for the past month, this is drifting lower and comes in at 350 this morning. We have not seen the market close above this indicator since July; if the bulls could achieve that we could see short covering from the funds.

Bias: Bearish

Resistance: 345 **, 350 **, 355***, 360-362***

Support: 334-335 ***, 323-325 **

SOYBEANS (January)

Yesterdays Close: January soybeans closed 11 cents lower yesterday, trading in a range of 16 cents. Funds were estimated to have been sellers of 9,500 contracts on the day.

Fundamentals: Yesterdays export inspections came in at 2,087 metric tons, this was in the range of expectations from 1,700-2,400 metric tons but was lower than last weeks 2,493 metric tons. Although this number was in line with expectations, it is still nearly 12% behind where we were last year at this time. Yesterdays crop progress report showed that beans are 93% harvested, the average analyst estimate was for 95% which would have been in line with the five-year average. We also received the weekly commitment of traders report yesterday, this showed that funds had a net long (futures and options) position of 45,053 this was an increase of 6,037 from the previous week. Keep in mind that this data is collected in the first half of the week and does not include Thursdays USDA report. As of Friday, Brazilian beans were said to be 56.2% planted, this is nearly 10% behind last years near record pace.

Technicals: As mentioned in yesterdays report, there was technical damage done last week when prices broke down and closed below trendline support that has held for two months. Prices stabilized on Friday at the 50% retracement from the June lows to the July highs but sliced through that along with the 50, 100, and 200 day moving average yesterday which led to some accelerated selling via long liquidation. Yesterdays price action marked the lowest close since October 4th. This technical damage neutralizes our bias. The next line in the sand for support comes in at 968 , a break and close below that could lead to additional pressure in the market. On the flipside, previous support now becomes resistance, that comes in from 980-984 .

Bias: Neutral

Resistance: 980-984 ***, 999 -1004 **, 1014**

Support: 968 ****, 957-963 ****, 947 **

WHEAT (December)

Yesterdays Close: December wheat futures closed 6 cents lower yesterday, trading in a range of 9 cents on the day. Funds were estimated to have been sellers of 6,000 contracts during the session.

Fundamentals: Export inspections yesterday morning came in at 301 metric tons, this was in line with the expected range from 250-450 metric tons and was a notch above last weeks 285 metric tons. Yesterdays crop progress report showed that winter wheat is 95% completed, this was in line with the average analyst estimate and 1% ahead of the five-year average. Good to excellent ratings came in at 54% which is 1% lower than last week and 2% lower than the estimates. The crop is 84% emerged. Yesterdays commitment of traders report showed funds are net short 128,121 contracts, this is an increase of 12,554 from the previous week.

Technicals: The market is trying to form a base with higher highs and higher lows posted since making new contract lows of 416 on October 31st. 419 is the higher low and will need to hold for the bulls to have a chance at getting back to higher highs. Those higher highs come in at 434 and will act as first resistance with additional resistance coming in at 438 and 443. These represent the 50-day moving average, an indicator we have not closed above since July 443 represents recent highs. A close above these resistance levels could encourage short covering from the funds. Our bearish bias will remain until we see a break out above technical resistance.

Bias: Bearish

Resistance: 434 **, 438*** 443****, 462 **, 478-479****

Support: 419**, 415 **, 399-402 ****, 390-392 **

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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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