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Blue Line Morning Express (Grains)

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CORN (December)

Yesterdays close: December corn futures closed 4 cents lower yesterday, trading in a range of 5 cents. Funds were estimated to have been sellers of 13,000 contracts on the day.

Fundamentals: New news is hard to come by at the midway point of the week. As of now it seems that the market is still digesting last weeks USDA report which should a much larger crop than many if not all were expecting. Harvest is nearly complete here in the states which could keep a lid on the market over the near term with producer selling. We do have an EIA report out at 9:30am cst, this will give us an updated look at ethanol data. Tomorrow morning, we will have the export sales data. South American developments will continue to be monitored as this will likely be the most likely catalyst to move the market in the very near term.

Technicals: Lower highs and lower lows have been the trend over the past few months. The slow bleed lower should be a concern to bulls in the market looking for a reversal. If you are long the market you would probably rather see a one-day panic sell that led to capitulation followed by short covering. 334-335 has been a big level on our radar and remains the near-term target (although just a stones throw away now). On the flipside, previous support now becomes resistance, the market needs to get back out above 342 -345 to encourage any sort of friendly price action. The RSI (relative strength index) is showing 33.5 this morning, the general rule of thumb is a reading below 30 indicates oversold.

Bias: Bearish

Resistance: 342 -345 **, 355***

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

SOYBEANS (January)

Yesterdays close: January soybeans closed 6 cents lower yesterday, trading in a range of 10 cents. Funds were estimated to have been sellers of 6,000 contracts on the session.

Fundamentals: As with corn, new news is hard to come by here in the middle of the week with harvest all but done here in the states. South America will be the key catalyst over the intermediate term as they continue to plant and enter into the developmental stages. Precipitation in Mato Grosso was said to be beneficial, planting is expected to be nearly complete by the end of the month. Seasonal trends show that buying beans on November 16th and selling them on December 28th has been profitable 15 out of the last 15 years with the average gain of nearly 43 cents (this is not a trade recommendation). Export sales will be out tomorrow morning, we will have those numbers in tomorrows report.

Technicals: January soybeans traded down to key technical support yesterday at 968 , this will be an important level on a closing basis. If the bears manage to break down support and close below, there is plenty of room to run to the downside. On the flipside, previous support now becomes resistance and that comes in from 979 -983, this pocket represents the 50, 100, and 200 day moving average. The market has traded over 40 cents off of last weeks high this week, but the RSI is not yet showing signs of exhaustion, this mornings reading is at 40.71.

Bias: Neutral

Resistance: 979 -983***, 999 -1004 **, 1014**

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

WHEAT (December)

Yesterdays close: December wheat futures closed 2 cents higher yesterday, trading in a range of 6 cents. Funds were estimated buyers of 6,000 contracts on the day.

Fundamentals: We wish we had a fundamental reason for yesterdays rally but that would just be reaching for a silver lining to put the bulls at ease. There has been very little new news to change things on the fundamental side. If the news wires stay flat, perhaps we could see funds look to cover some shorts but that might be a stretch too. Export sales out tomorrow will likely have some impact on price action. The bulls need to see a trend of higher exports to start eating away at the ample supplies and not just a week here and a week there.

Technicals: The market has been consolidating sideways over the past two weeks, but the bears remain in control. 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 437 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 -437 **, 443****, 462 **, 478-479****

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

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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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