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Are grains at the beginning of a bull market?

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Are grains at the beginning of a bull market?

Jan 31, 2018

CORN (March)

Yesterday’s Close:  Corn futures finished the session up 2 ¾ cents, trading in a range of 3 ¼ cents.  Funds were estimated to have been buyers of 12,000 contracts on the day.

Fundamentals:  Funds have been busy covering a portion of their short position over the last week on the back of some concerns over potential yield loss in South America.  The USD is retreating this morning as traders look forward to todays Fed meeting and Fridays jobs data.  Though the charts are becoming more favorable to the bulls, we continue to keep our expectations tempered.  The weekly ethanol report from EIA will be released this morning at 9:30am cst; ethanol numbers have been strong and corn bulls need to see that continue.

Technicals:  Technicals have certainly turned more friendly over the past week with prices marching above the 100 day moving average, Fibonacci retracements, and previous important price points.  Ranges are expanding, and charts are shifting.  Bears need to become more cautious about their short term short thesis. The RSI (relative strength index) reached its highest level since July yesterday which could be a reason for this mornings minor pull back.  Previous resistance now becomes first support, that comes in at….Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

SOYBEANS (March)

Yesterday’s Close:  March soybean futures finished the day up 8 ¼ cents, trading in a range of 16 ½ cents.  Funds were estimated buyers of 11,000 contracts.

Fundamentals:  Soybeans have been in a choppy trade over the last week as the bulls and the bears play tug of war with fundamentals.  Concerns over dryness in Argentina has been a real concern, but how much of that is priced in and how much would it affect the yields?  It looks like hot and dry will persist over the next week and a half but after that rain works its way in.  If rain does work its way back into forecasts in the near term, we will see that weather premium evaporate and sellers step back in.  Seasonally speaking, we are in a bullish time.  If you had bought May soybeans on January 28th and sold February 26th for the last 15 years, you would have been profitable for 13 of them with the average gain being roughly 28 cents.

Technicals:  The market managed to trip stops above recent highs but could not encourage significant short covering or buying interest after doing so.  The market remains trapped in between some very important technical indicators.  There is significant support from….Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

WHEAT (March)

Yesterday’s Close:  March wheat futures finished yesterdays session up 9 cents, trading in a range of 8 ¾ cents on the day (gap).  Funds were estimated buyers of 6,500 contracts.

Fundamentals:  The market has been making a strong move higher over the last week with funds covering shorts on the decline in crop conditions for winter wheat.  Kansas City wheat has been in the driver’s seat for this weather market.  The USD has been relatively volatile recently and that could continue with the Fed meeting later today and jobs data on Friday.

Technicals:  The market reached overbought levels not seen since we peaked last July.  Does that mean the market is out of gas? No.  It does mean that new buyers should tread lightly.  456 ¼-458 ¾ is first technical resistance, this is the overnight highs along with a key retracement level from last years trading range.  A conviction close above opens the door to an extension towards….Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

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