Grain markets are waiting on today’s crop report and Friday’s WASDE report, notes Oliver Sloup.
Corn (ZCZ)
Fundamentals: Last week, corn futures traded both sides of unchanged but finished fractionally higher. Crop Progress will be out this afternoon, after that, much of the attention will turn towards Friday’s WASDE report. We will continue to compile estimates and have those for you by mid-week. Friday’s Commitment of Traders (COT) report showed that funds sold 9,322 contracts from Oct. 22 to Oct. 29, expanding their net short position to 85,337.
Technicals: The market continues to resemble a stick in the mud around the mid $3.80’s, keeping many of our support and resistance pockets intact. Technical support comes in at $3.77, this was tested and held last week. This pocket represents the breakout point from the Quarterly Stocks report on Sept. 30, support from the Oct. 10 USDA report, a key retracement, and the 50-day moving average. A close below will neutralize our bias. On the resistance side, $3.90-$3.92 ¾ is the first pocket. This was tested and held in the back half of the week.
Bias: Neutral/Bullish
Previous Session Bias: Bullish
Resistance: 390-392 ¾***, 400-402 ½***, 412 ¾-417 ¼****
Support: 377-381 ½ ****, 363-366***
Soybeans (ZSF)
Fundamentals: January soybeans were under pressure in the first half of last week’s trade on the cancellation of this month’s global summit in Chile, due to protests in Santiago. Both sides seemed hopeful that they would have been able to sign a Phase 1 deal at the summit (as if there’s nowhere else they can meet). Headlines around trade will continue to have an effect on the market, but perhaps a more meaningful affect as we are now less than a year away from the election (November 3rd, 2020). Friday’s WASDE report will be the big-ticket item this week, we will have estimates out by mid-week. Friday’s Commitment of Traders report showed funds bought 3,503 contracts from October 22nd to October 29th, expanding their net long position to 72,325 contracts.
Technicals: January soybeans tested and held our technical support pocket perfectly last week, we had that defined as $9.21-$9.28 ½, labeling it as a buying opportunity; whether that be bullish traders initiating positions or shorts covering. The market is now approaching our pivot pocket from $9.40-$9.41 ½. If the bulls can achieve a conviction close above here, we could see an extension towards 960.
Bias: Bullish
Previous Session Bias: Bullish
Resistance: 953-959 ½****, 973 ¼-979 ¼***
Pivot: 940-941 ½
Support: 921-928 ½***, 899-906 ¾ ****
Chicago Wheat (ZWZ)
Fundamentals: Chicago wheat futures worked lower for much of last week before finding technical buying in the final two days. Friday’s COT report showed that funds sold 7,057 contracts from Oct. 22 to Oct. 29. Money flow and technicals have been the key catalyst for us, but we are excited to get some new fundamental news from Friday’s WASDE report; we will have estimates out by mid-week.
Technicals: The market tested and held our four-star support pocket on Thursday, we defined that as $5.00-$5.00 ¼. We mentioned in our weekly “2 Minute Drill” that it could lead to a retest of $5.15 ¾ and a failure there could be the beginning of a bearish head and shoulders pattern. This week will be very important for the setting the tone on the technical landscape.
Bias: Neutral/Bearish
Previous Session Bias: Neutral
Resistance: 525 ¾-531 ½**, 538 ¼-543****
Pivot: 515 ¼
Support: 500-506 ¼****, 485 ½-489 ¼***
Kansas City Wheat (December)
Technicals: The market tested and held technical support nearly perfectly on Thursday, keeping the trend-line from the contract lows intact. We remain more optimistic on the KC contract but need to see that trend-line hold, from $4.08 ½-$4.10, a break and close below would neutralize our bias. On the resistance side, the bulls want to achieve a conviction close above $4.37-$4.39 ½ to encourage another leg higher.
Bias: Bullish/Neutral
Previous Session Bias: Bullish/Neutral
Resistance: 437-439 ½***, 454-457 ¾****
Pivot: 415 ½-420
Support: 408 ½-409****, 397-400***, 380*
Cotton (December)
Technicals: Cotton futures failed to breakout above technical resistance early last week, leading to profit taking in the back half of the week. We remain optimistic on prices but welcome a healthy pullback for a better buying opportunity; ideally closer to 62.91-63.39.
Bias: Neutral/Bullish
Previous Session Bias: Neutral/Bullish
Resistance: 65.85-66.05****, 68.35-68.60***
Support: 62.91-63.39****, 59.58-60.79***, 56.59-57.55****
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com.
