Recent weakness in the grain markets is testing near-term support, reports Oliver Sloup.
Corn (ZCZ)
Fundamentals: Corn futures saw another round of profit taking yesterday, spilling into the overnight and early morning session. In yesterday’s report we wrote: “We remain optimistic on prices but continue to feel a pullback/cleanse would be healthy for the market, especially during a week where there aren’t a lot of flashy headlines.”. The lack of headlines has us leaning on technicals for the remainder of the week.
Technicals: The market has pulled back into our pivot pocket of $3.90 to $3.92 ¾, this was previously resistance and now becomes support. If you had reduced at the end of last week or Monday morning, this would be the spot to consider getting that long exposure back on. If the bulls cannot defend this pocket on a closing basis, we could see a retest to the bottom end of the recent range at $3.77.
Bias: Bullish
Previous Session Bias: Bullish/Neutral
Resistance: 400-402 ½***, 412 ¾-417 ¼****
Pivot: 390-392 ¾
Support: 377-381 ½ ****, 363-366***
Soybeans (ZSX)
Fundamentals: November soybean futures retreated yesterday on the back of broad-based selling in grain markets and a poor crush report. Yesterday’s National Oilseed Processor Association crush report came in at 152.566 million bushels, about 10 million bushels less than expectations. Like corn, we remain optimistic on prices but would welcome a deeper pullback in a week with little news scheduled.
Technicals: The market staged in inside day, trading within the previous day’s range and finishing near our pivot pocket from $9.36 ½ to $9.38 ¾. If the bulls cannot defend this pocket, we could see a run closer to $9.20, a spot that we would see value to the buy-side. Higher lows and higher highs have been the trend and we expect that continue over the intermediate term.
Bias: Bullish/Neutral
Previous Session Bias: Bullish/Neutral
Resistance: 948-950****
Pivot: 936 ½-938 ¾
Support: 920-924**, 899-906 ¾ ****, 879 ½-882 ¾***
Chicago Wheat (ZWZ)
Fundamentals: Chicago wheat peeled off lower yesterday as broad-based selling in grains was unavoidable. If corn can stabilize, we would not be surprised to see wheat find its footing too. With little new news on the wire, our focus will continue to be on money flow and technicals.
Technicals: The market pulled back into our four-star support pocket, previously resistance. We have had this listed as $5.00 to $5.06 ¼. If you’re bullish the market, this is the area to consider adding long exposure. If you’re bearish the market, this is the pocket to reduce short exposure in. Higher lows and higher highs have been the trend, we would not be surprised to see that continue.
Bias: Neutral/Bullish
Previous Session Bias: Neutral/Bullish
Resistance: 515 ¾**, 525 ¾-531 ½****
Support: 500-506 ¼****, 483-486 ¾***, 476 ¼****
Kansas City Wheat (December)
Technicals: The market has pulled back into first support at $4.15 ½, we see value here if this level holds. A failure to defend support could open the door for a run at the bottom end of the recent range, closer to $4.00.
Bias: Bullish
Previous Session Bias: Neutral/Bullish
Resistance: 428-432 ¾****, 437-442**
Support: 415 ½-420**, 397-400***, 380*
Cotton (December)
Fundamentals: December cotton futures finished yesterday’s session on higher ground on the back of technical support and concerns that weather could deteriorate quality as we work our way through the harvest, which is currently 32% complete. Any positive trade headlines would be a positive for cotton, but we don’t expect anything of substance in the very near term.
Technicals: Cotton futures managed to hold our pivot pocket through yesterday’s session which bodes well for the bull camp in the near term, leaving the door open for a run at 65.00-65.85. If money flow softens up and we break back below yesterday’s low that would neutralize our bias, as it could open the door for pressure down below 60.00.
Bias: Bullish
Previous Session Bias: Neutral/Bullish
Resistance: 65.00-65.85****, 68.35-68.60***
Pivot: 62.50-62.91
Support: 59.58-60.79***, 56.59-57.55****
Oliver Sloup provides daily grain analysis and Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com.
