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Corn to grind higher

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Blue Line Grain Express

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CORN (December)

Yesterdays close: December corn futures closed 1 cents higher yesterday, trading in a 3 cent range on the day. Funds were estimated buyers of 12,000 contracts on the day.

Fundamentals: Export inspections yesterday morning came in at 632,793 metric tons, this was within the expected range from 500,000-700,000 metric tons. Yesterdays crop progress report showed that the corn harvest is now 90% complete, this is up 7% from the previous week but 1-2% behind analyst estimates. This also compares to the five-year average of 95%. South American weather will be a key fundamental catalyst as we look to round out the year. Brazil is estimated to be 73% planted, this is on pace with last year and ahead of the five-year average pace of 68%. There have been some weather minor concerns in a few isolated areas but there does not seem to be terribly threatening just yet.

Technicals: Corn has staged two consecutive closes higher which is a sign of relief for bulls. We continue to fee there is more near-term upside into Fridays option expiration (abbreviated trading session). There has been a reduction in the put open interest from 340-350, but still remains significant enough that there should be a floor in the market for the remainder of the week. 348 -350 is the pocket we are looking for, this represents the 50-day moving average, an indicator that the market has not closed above since July. This pocket also represents the psychological and round 350 level. 350 would also do the most damage in terms of evaporation of option premium into expiration. Where we trade post option expiration will be very key in setting the tone for the rest of the year. Continued momentum could lead to short covering from the record short funds.

Bias: Neutral/Bullish

Resistance: 348 -350****, 355***

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

SOYBEANS (January)

Yesterdays close: January soybeans finished the day near unchanged on the day, trading in a range of 9 cents on the day. Funds were estimated to have been buyers of 3,000 contracts on the day.

Fundamentals: Export inspections yesterday morning came in at 2,131,354 metric tons, this was within the expected range of 1,800,000-2,200,000 metric tons and marks the fifth consecutive week over 2,000,000 metric tons. Yesterdays crop progress report showed that soybean harvest is 96% complete, this is up 3% from the previous week but still lagging the five-year average by 3%; this was in line with the analyst expectations. As with corn, a lot of attention will be put on South American weather and crop development. There has been talk of dry weather in Argentina that has put a little premium into the market, if this persists we could see additional strength come into the market. On the flipside, rains in those questionable areas could keep a lid on the market in the near term.

Technicals: Soybean futures started out yesterday on a softer note but found support from 979-984 which we laid out on RFD TV as a value area yesterday. This pocket contains the 50, 100, and 200 day moving average as well as the 50% retracement from the June lows to the July highs. A break and close below opens the door to 968 and possibly a move below, a breakdown would shift our bias from neutral/bullish to outright bearish. On the resistance side of things, the bulls want to reclaim the $10 handle.

Bias: Neutral/Bullish

Resistance: 999-1004 **, 1014-1018**

Support: 979-984 **, 968 ****, 957-963 ****

WHEAT (December)

Yesterdays close: December wheat futures closed six cents lower yesterday, trading in a range of 7 cents on the day. Funds were estimated sellers of 5,000 contracts on the day.

Fundamentals: Export inspections yesterday morning came in at 259,264 metric tons, this was just above the bottom end of expected range from 250,000-450,000 metric tons. That export inspection marks the 3rd lowest read of the year and keeps us behind the expected pace from the USDA. Yesterdays crop progress report showed the winter wheat crop at 52% good/excellent, this is 2% lower than what analysts had been expecting. Winter wheat emergence is at 88%, this is up 4% from last week and is on pace with last year and the five-year average.

Technicals: We remain bearish on wheat futures although prices have seemingly stabilized and have been trading in a sideways range over the past three weeks. Lower highs and lower lows have been the longer-term trend and we are expecting that to continue. Though we remain bearish, we are remaining patient for better value. With December expiration just a stones throw away, we will be moving out to the March contract and would like to sell prices closer to 450.

Bias: Bearish

Resistance: 434 -436 **, 443****, 462 **, 478-479****

Support: 416 -418**, 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

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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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