US-China trade is once again driving grain markets, reports Oliver Sloup.
Corn (ZCZ)
Fundamentals: December corn futures were down for the week, the third consecutive week of lower price action. Better weather and the dismal demand have led to long liquidation, outweighing the fears over potential production disruptions this year. Reports of retaliatory action from China has the broader Ag sector under pressure to start the week. Crop Progress will be out after the close, expectations are for corn to be at 57% good/excellent, down 1% from the previous week. Friday’s Commitment of Traders (COT) report showed funds holding a long position of 111,952 contracts.
Technicals: The bears pounced and too full control of the chart last week, breaking below that significant pocket from $4.18 to $4.20. If the bulls want to neutralize the technicals, they will need to achieve consecutive closes back above this pocket. If we start breaking and closing below the psychologically significant $4.00 handle, we could see the selling accelerate.
Bias: Neutral
Previous Session Bias: Neutral/Bullish
Resistance: 418 ¼-420 ½***, 431 ¼-432 ¾**, 447-450***
Pivot: 404 ½-406 ¼
Support: 395-397 ¼**, 376 ½-380****
Soybeans (ZSX)
Fundamentals: Soybean futures broker lower last week on the back of news that President Trump would implement additional tariffs in September, this raised concerns of retaliatory action from China; which has been the headlines over the last 24 hours. There have been some conflicting headlines; one that says, “China halts U.S. ag imports” and the other that says China state planner says China and U.S. agreed that China will buy soybeans. Hopefully we will receive clarity soon. Crop Progress after the close is expected to show good/excellent ratings at 54%, unchanged from the previous week. Friday’s COT report showed funds holding a long position of 14,610 contracts.
Technicals: The market collapsed below the low end of the wedge last week which accelerated the selling towards our next support pockets. Our bias was bearish all of last week and then neutralized on Friday. With prices testing 4-star support, we are keeping our bias at neutral to start the week.
Bias: Neutral
Previous Session Bias: Neutral
Resistance: 875**, 887 ½-891 ¾***, 900-904 ¼***
Support: 855 ½-862 ½****, 839 ¾-843 ¾**
Wheat (ZWU)
Fundamentals: Wheat futures have been volatile recently as money flow dominates the market. Broad weakness in the grain sector has bled into wheat prices. Our bias for the last several weeks has been bearish, but we went to neutral before Friday’s open, we remain neutral to start the week.
Technicals: Our support pocket from $4.71 ¾ to $4.73 ¾ was tested and held last week, setting up for Friday’s relief rally. We continue to believe that rallies will be just that, relief. The bears remain in control until we see consecutive closes back above 507 ¼-509 ½.
Bias: Neutral
Previous Session Bias: Neutral
Resistance: 488 ½-491 ½**, 507 ¼-509 ½****
Support: 471 ¾-473 ¾***, 444½-446**, 427 ¼****
Use the above technical support/resistance levels, which Bill Baruch provides on all markets throughout the week at BlueLineFutures.com.
