The grain complex rallied after early weakness and is prepared to test overhead resistance, notes Oliver Sloup.

Corn (ZCZ)

Fundamentals: December corn futures finished yesterday’s session up 5.75¢, trading in a range of 9.5¢. The inability to take out contract lows with conviction coupled with concern over cooler temperatures and possibly an early frost, led to moderate short covering from funds. The next two sessions will be pivotal in setting the tone for the start of September. The other sliver of good news was in yesterday’s weekly EIA ethanol report, showing production increased (finally) 15,000 barrels per day. Weekly export sales this morning came in at 856,400 metric tons.

Technicals: Yesterday’s low came within a half of a cent from contract lows, spring boarding from that point into the afternoon session. The price action was the most encouraging we’ve seen in several weeks, but we need to see follow through to round out the week.

Soybeans (ZSX)

Fundamentals: Soybeans started yesterday’s session lower but managed to reverse on the back of cooler weather forecasts, raising concerns over an early frost. The bulls need to see these cooler forecasts extend, if we turn back warm, we would expect pressure to come back into the market. Jawboning between U.S. and Chinese trade delegates have turned “softer” but there’s still not much positive news to report on that front. Weekly export sales this morning came in at 448,300 metric tons.

Technicals: Soybeans tripped stops below our support.

Chicago Wheat (ZWZ)

Fundamentals: December Chicago wheat managed to reverse off yesterday’s early morning lows with conviction, thanks to some spillover strength in the corn and soybean market. If broad based money flow starts to shift in the grain space, we would expect to see that help wheat work higher too. With that said, we think there is better value in the KC contract. Weekly export sales this morning came in at 661,700 metric tons.

Technicals: Yesterday’s reversal off the lows was encouraging, but the bulls need to see follow through to round out the week. Resistance remains intact.

Kansas City Wheat (December)

Bias: Bullish

Previous Session Bias: Neutral/Bullish

Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com.
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