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Pullbacks Are Buying Opportunities

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Grain Express

June 19, 2019

Clarity on the weekly Crop Progress report:The % planted is based off of farmers intentions for that week, not the 92.8 million acres from the March Prospective Plantings report. If delays continue and farmers are no longer able to plant, it would be possible to see the percentage increase with no actual increase in planted acres. In other words, we will get to 100% planted, but 100% of what, is the question.

Corn (July)

Yesterdays Close: July corn futures finished yesterdays session down 5 cents, trading in a range of 15 cents. Funds were estimated sellers of 18,000 contracts.

Fundamentals: corn futures continue to retreat on the back of profit taking and position squaring into Fridays option expiration, we would not be surprised to see this continue in the back half of the week. As mentioned in previous reports/interviews, we will be using pullbacks as buying opportunities. Weather will remain a driving catalyst, the next week and a half continues to look wet which could extend delays and lead to additional prevent plant acres. We will get an acreage update from the USDA next Friday; we will have estimates out beforehand.

Technicals: The market traded within our support and resistance levels, leaving those pockets unchanged as we head into the floor open. Monday morning on RFD-TV we talked about pullbacks being healthy and the December contract retreating to 450-455 was our first target, that equates to 438-442 for July futures. If you reduced longs on Mondays reversal, this would be the spot to put exposure back on. For those thinking that the sky is falling this week, we have not even erased all of Fridays gains.

Bias: Bullish/Neutral

Resistance: 464 **, 475***

Support: 438-442***, 423 -424 **

Soybeans (July)

Yesterdays Close: July soybean futures finished yesterdays session up 2 cents, trading in a range of 18 cents. Funds were estimated buyers of 5,500 contracts.

Fundamentals: As wet weather persists, so has the buying. The talk about prevent plant has started to shift from corn to beans and we expect to see that continue if weather confirms forecasts over the next two weeks. Another silver lining (though slim) is the fact that President Trump will be meeting with Chinas President Xi at the G-20 summit next week, a meeting that was previously taken off the table following a failure to find a trade agreement. We will get an acreage update from the USDA next Friday; we will have estimates out beforehand.

Technicals: The market failed at our 4-star resistance pocket yesterday (defined as 920 -925 ) which has led to prices retreating. For us, a pullback in soybeans would be viewed as healthy and present a buying opportunity. The bulls want to defend 895 -900 on a closing basis. This pocket represents the gap from Fridays close, the 100-day moving average, and the psychologically significant 900 handle. That equates to 918 -924 for the November contract.

Bias: Bullish/Neutral

Resistance: 920 -925 ****

Support:895 -900****, 883 **, 866-872 ***

Wheat (July)

Yesterdays Close: July Chicago wheat futures finished yesterdays session down 8 cents, trading in a range of 15 cents. Funds were estimated sellers of 7,000 contracts.

Fundamentals: In Mondays interview with RFD-TV and yesterdays report we stated that wheat would be the weak link in a round of profit taking for the grain complex, that has continued to play out in the overnight and early morning trade. Though wheat is the weakest, we are approaching technical support (see technical section below).

Technicals: Our 4-star support pocket comes in from 518 -521 , a must hold area for the bull camp. A break and close below here opens the door for another leg lower, closer to the psychologically significant $5.00 handle. ON the resistance side of things, the bulls want to achieve consecutive closes back above 529-530 .

Bias: Neutral

Resistance: 542 -550***, 563 -566 ***

Pivot: 529-530

Support: 518 -521 ****, 495-500***

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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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