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CORN

Corn Shortage! Blah Blah BlahThis week has brought about news on the projected corn yields dropping marginally, which in turn, is pushing this beast into higher territory. As we check out the chart we can see we have a significant golden pocket that will act as the Berlin Wall for corn. Prices below the golden pocket will act as East Berlin, controlled by the soviets during the Cold War. Trapped in a descending trend. If corn manages to push past the golden pocket + trend line resistance, corn will now be on the west side of the Berlin Wall. Free to explode into the June highs of $7.5. In this analogy, I personally think that the soviets will maintain control and rule over corn until harvest is over. Corn harvest has started in the south and will continue into Nov. As we harvest we will have more corn in the bins and ready to use. Which will lead to lower prices IMO. Simple supply and demand. Based off of the chart technicals, I am even more confident in saying that corn will be rejected because of where the GP and trend resistance lays. Once price reaches those levels I am expecting to see a bearish divergence on all three oscillators, and then I will go short big time. This could be a multi-month trade. But as always take profits on your way at key targets. Major short target: $5.70-$5.30
CBOT:ZCZ2022Short
by farmtrader15
3
Chinese Data Sends Grain Markets LowerFundamental Snapshot China Weaker than expected growth in China was reported overnight, with real estate leading the way to the downside. The weaker than expected data prompted their Central Bank to announce a surprise interest rate cut. We are seeing the slower growth data have ripple effects in commodities this morning with oil down over 5% and soybeans down over 3%, just to name a few. U.S. Dollar The US Dollar is firming on the back of poor Chinese data, continuing the relief rally from Friday. The U.S. dollar was able to defend 105, which was previous resistance in May and June and the eventual breakout point in July. If the dollar continues to rally, it could be a headwind to some commodities. Weather Weater throughout the Midwest looks cooler and wetter for the next 1-2 weeks. For some problem areas, it may be too little too late. The conversation around weather will be shifting to South America in the coming weeks as they begin planting. Corn December corn futures "broke out" above resistance on Friday which took prices to the 50-day moving average and our next resistance, 640 1/2. Futures are weaker this morning, giving back all of the gains from Friday and then some. This takes prices back to trendline support. A failure to defend this area could open the door for a retest of the psychologically significant $6.00 handle. Bias: Neutral Previous Session Bias: Neutral Resistance: 638-643**, 650-655*** Pivot: 620 Support: 584 ¼-587 ½***, 561 ¾**, 542 ¼-547 ¾*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZC1!
by OliverSloup_BlueLine
Lower than expected Chinese data is pressuring soybeansFundamental Snapshot China Weaker than expected growth in China was reported overnight, with real estate leading the way to the downside. The weaker than expected data prompted their Central Bank to announce a surprise interest rate cut. We are seeing the slower growth data have ripple effects in commodities this morning with oil down over 5% and soybeans down over 3%, just to name a few. U.S. Dollar The US Dollar is firming on the back of poor Chinese data, continuing the relief rally from Friday. The U.S. dollar was able to defend 105, which was previous resistance in May and June and the eventual breakout point in July. If the dollar continues to rally, it could be a headwind to some commodities. Weather Weather throughout the Midwest looks cooler and wetter for the next 1-2 weeks. For some problem areas, it may be too little too late. The conversation around weather will be shifting to South America in the coming weeks as they begin planting. Soybeans November soybean futures had a big reversal on Friday, taking prices into positive territory following a bearish USDA report. The news out of China over the weekend has offset Friday's bullish reversal and has taken prices back near first support, 1394-1400. A failure to defend this pocket could lead to another leg lower. There is still a gap on the chart from July 26th, that comes in from 1349 1/4-1356. Bias: Neutral Previous Session Bias: Neutral Resistance: 1463 ¼**, 1481-1489***, 1500-1507 ¾****, 1529 ¾-1536 ½**** Pivot: 1440-1450 Support: 1394-1400***, 1349-1356****, 1300** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZS1!
by OliverSloup_BlueLine
Will lean hog catch up?The commodities market is a close-knit one, with the price hike in one commodity often affecting another. Such correlation is evident in agricultural products such as soybean meals, corn, and lean hogs. Lean hog prices are highly correlated with Soybean Meal and Corn as young feeder pigs are fed a diet of roughly 70% corn and 30% soybean meal. As such when corn and soybean prices rise, lean hog prices often follow suit. As spelt out in some of our previous ideas , we think agricultural commodities are due for a rally amid the backdrop of supply chain constraints arising from the Russian-Ukraine crisis, and high fertilizer costs (due to surging natural gas prices) which in turn feed into crop planting cost. Over the past 3 weeks, most agricultural products staged a rebound with Soybean Meal and Corn getting in on the action as well. The rally resulted in Corn prices up 15% and Soybean Meal prices up 10% from 3 weeks ago while lean hog prices lagged, moving only 4.4%. Thus, we think that lean hog prices have room for more upside. Looking at the chart of HEZ2022, we see the lean hog December 2022 futures breaking out of the range established from the start of the year and coming back to retest the range-high. We see this as support for lean hog prices to break up. Should agricultural commodities continue their rally, higher feed cost would be translated into high lean hog prices. Spread Entry at 90.250, stops at 87.850. Targets at 95. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Reference: www.cmegroup.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
Editors' picks
CME:HEZ2022Long
by inspirante
5
Corn Gains Ground Ahead of Tomorrow's WASSDE Report Fundamental Snapshot WASDE Estimates Reuters has complied estimates for Friday’s WASDE report. The average analyst estimate for corn yield is 175.9, with production at 14.392. The average estimate for soybean yield is 51.1, with production at 4.481. Over the years, the August report has been known to offer big surprises to the market. Weekly Export Sales Corn: Net sales of 191,800 MT for 2021/2022 were up noticeably from the previous week and from the prior 4-week average. Net sales of 191,300 MT for 2022/2023 were reported. Soybeans: Net sales reductions of 66,700 MT for 2021/2022. Net sales of 477,200 MT for 2022/2023. Wheat: Net sales of 359,200 metric tons (MT) for 2022/2023 were up 44 percent from the previous week, but down 34 percent from the prior 4-week average. Corn December corn futures have been testing the upper end of the recent range for the past 2 ½ sessions, that comes in near 625-630. This pocket also contains the 200-day moving average. If the Bulls rea able to chew through this pocket we could see an extension towards 650, which is both psychologically significant and technically significant. A move out above there could spark a bigger directional move, until then we continue to believe there will be plenty of short-term opportunities for participants on both sides of the market. Bias: Neutral Previous Session Bias: Neutral Resistance: 625-630***, 640 ½**, 650-655*** Pivot: 600 Support: 584 ¼-587 ½***, 561 ¾**, 542 ¼-547 ¾*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZC1!
by OliverSloup_BlueLine
Is an Inverse Head and Shoulders Pattern Forming? Fundamental Snapshot Crop Progress Yesterday’s weekly crop progress report showed further declining crop conditions. Good/Excellent conditions for soybeans were down 1%, to 59%, which was in line with expectations. However, corn G/E ratings fell 3%, to 58%, 2% lower than expectations. Private Estimates DTN released their yield estimates for corn and soybeans yesterday afternoon, and boy were they bullish. They have the national average corn yield at 167.2 bushels per acre, well below the USADA’s July estimate of 177. We have been assuming the market has been trading 174-175. DTN’s estimate for soybean yield comes in at 48.9, well below the USDA’s 51.5. As with corn, we’ve been assuming the market is trading closer to 50bpa. WASDE Estimates Reuters has complied estimates for Friday’s WASDE report. The average analyst estimate for corn yield is 175.9, with production at 14.392. The average estimate for soybean yield is 51.1, with production at 4.481. Corn (September): September corn futures got some friendly news yesterday afternoon which helped propel prices back to technical resistance. The last few times we have been up at this level we moved our bias back into bearish territory, but with a potential inverse head and shoulders pattern forming and a WASDE report looming, we are keeping our bias Neutral. A breakout and close above 628-632 could open the door for an extension towards 650. Bias: Neutral Previous Session Bias: Neutral Resistance: 628-632***, 645-652 ½*** Pivot: 600 Support: 580 ¾-586 ¼****, 561 ¼**, 542 ¼-547 ¾*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZC1!
by OliverSloup_BlueLine
1
Corn Fills the Gap (partially) Fundamental Snapshot Weekly Export Sales Corn: Net sales of 57,900 MT for 2021/2022 were down 62 percent from the previous week, but up 31 percent from the prior 4-week average. Net sales of 256,700 MT were reported for 2022/2023. Soybeans: Net sales reductions of 11,000 MT for 2021/2022 were down 81 percent from the previous week and 90 percent from the prior 4-week average. Net sales of 410,600 MT were reported for 2022/2023. Wheat: Net sales of 249,900 metric tons (MT) for 2022/2023 were down 39 percent from the previous week and 55 percent from the prior 4-week average. Ukraine Production Ukraine’s Prime Minister said on Wednesday that their harvest could be in the ballpark of 65-67 million tonnes. This would be a decline of roughly 20% from the previous year, which all things considered doesn’t sound too bad. Ukraine Exports There are 17 more vessels ready to leave ports in Ukraine, but there has not been a timeline established for departures. Those involved with the export deal have noted that it may take a few weeks for things to start picking up. Technical Landscape Corn Technicals (September): Corn futures worked into the gap yesterday, which we used as our 4-star support pocket, 580 ¾-586 ¼. Though the gap was not all the way filled, the price action was friendly enough to move our short-term bias back into bullish territory. A break and close below that support pocket would likely move our bias back into bearish territory as it could take us back to the July 22nd low, 561 ¼. Upside objectives for the Bulls; 6.00. If the market can achieve consecutive closes back above $6.00 we could see a retest of our first resistance pocket, 624-630. Bias: Bullish/Neutral Previous Session Bias: Bearish/Neutral Resistance: 624-630***, 645-652 ½*** Pivot: 600 Support: 580 ¾-586 ¼****, 561 ¼**, 542 ¼-547 ¾*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZC1!
by OliverSloup_BlueLine
Short the Hog Margin If You Expect Lower Pork PriceCME:HE1! CBOT:ZC1! CBOT:ZM1! On August 1st, USDA Daily Hog and Pork Report shows that benchmark Iowa Carcass Base Price averages $128/cwt. This is a 15% increase year-over-year, and a whopping 70% higher than the five-year average of $75. Is pork still affordable? Meanwhile in the futures market, while August Lean Hog contract (HEQ2) is quoted at $120.50/cwt, October (HEV2) is sharply lower at $97, and December (HEZ2) is even lower at $87.80. Do we expect pork price to fall a few months down the road? Let’s find out what moves pork price. We start with hog production. It consists of five phases: 1. Farrow-to-wean 2. Feeder pig 3. Finishing 4. Breeding stock 5. Farrow-to-finish Pork price fluctuates following a cobweb pattern due to production lags and adaptive expectations, according to Cambridge economist Nicholas Kaldor. When prices are higher, it draws more investments. However, due to breeding time, there is lapse in the cycle. Eventually, market becomes saturated, leading to a decline in prices. Production is thus decreased. Again, this leads to increased demand and prices. The Hog Cycle repeats, producing a supply-demand graph resembling a cobweb. Hog farmers make business decisions based on their expectations of production profit, which is called Hog Crush Margin . It is defined by the value of lean hog (LH) less the cost of weaned pig (WP), corn (C) and soybean meal (SBM). Below is a sample formula. HCM = 2 x LH - WP - 10 x C -.075 x SBM In futures market, traders could replicate the economic hog crush margin with a Hog Feeding Spread involving CME lean hog (HE), CBOT Corn (ZC) and CBOT Soybean Meal (ZM). There is no futures contract for weaned pig (piglet). The size of relevant futures contracts: HE, 40,000 lbs.; ZC, 5,000 bushels; and ZM, 100 short tons. A typical hog feeding spread is 7:3:1, which may be expressed as: Hog Feeding Spread = 7 x HE – 3 x ZC – 1 x ZM If you expect hog margin to grow, Long the feeding spread: Buy lean hog, sell corn and soybean meal. For a shrinking margin, Short the spread: Sell hog, buy corn and meal. According to Chicago-based consultancy CIH, hog margin for July 1st-15th was $16.74. Margins surged over the first half of July as hog futures rallied while projected feed costs mostly trended sideways during this period. I expect a narrower hog crush margin going into 2023. It may likely turn negative. My theory : On the one hand, corn and soybean meal prices may fall but stay elevated. Russia-Ukraine conflict, bad weather and supply chain bottleneck present real risk for global food supply shortage. On the other hand, pork price could fall faster than feed ingredients. The combined effect is a narrowing hog crush margin. Several factors are at work: Firstly, the hog cycle. Higher price this year will induce more production next year, eventually lowering price. Secondly, with hyperinflation and a pending recession, we should expect substitution effect. Consumer would choose lower-priced protein over pork, reducing pork demand. Finally, China is the wild card. China is the world's largest pork producer. In 2018, it produced 54 million tons (MT) of pork, accounting for 45% of global pork production. With the outbreak of African Swine Fever starting in August 2018, it is estimated that half of China’s hog stock was wiped out over the next year. Pork production in 2019 was 42.55 MT, down 21%. To make up for the shortfall in domestic supply, China began buying pork in the global market in a big way. Frozen pork import grew from 1.19 MT in 2018, to 2.11 MT in 2019 (+75%), and 4.39 MT in 2020 (+108%), which took up half of global pork trades that year. CME lean hog rallied 60% in 2019. More buying from China means more pork demand in Americas and Europe. Global pork price and pork futures price both went up as a result. However, the party did not last long. China’s large hog firms aggressively racked up production capacity with government support. Muyang Group SZSE:002714 , the largest hog producer in the world, grew sales from 9 million hogs in 2019, to 18 million in 2020 (+100%), and 40 million in 2021 (+120%). It is on track to produce 55-60 million hogs this year (+38%~+50%). With domestic production largely recovered, China reduced pork import to 3.71 MT in 2021, down 15%. For the first six months in 2022, China imported only 810,000 tons, down 65% from the same period in 2021. China’s pork price has doubled from its February low. Again, with the Hog Cycle at work, there will be an oversupply of pork next year, further reducing the need for import. We could examine corn price trend further. Corn generally traded in the range of $3 to $4.50 per bushel but shot up to $7 in May 2021. It broke record again this year at $8 per bushel in April. I expect the corn price to fall but stay elevated from previous-year level. Soybean Meal is 50% higher than two years ago. Again, I expect it to fall but stay higher than pre-2020 level. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME:HE1!Short
by JimHuangChicago
1
Corn Futures Recover Friday's Losses Corn Commitments of Traders Update: Friday’s CoT report showed Managed Money were net sellers of 25,871 futures/options contracts through July 19th. 24,916 of this was long liquidation, just 955 were new short positions. This shrinks their net long position to 125,303 contracts. Broken down that is 202,400 longs VS 77,097 shorts. Fundamentals: Corn futures had another rough week, with the December contract losing 39 ½ cents. Cooler and wetter forecasts working their way into 1-2 week forecast didn’t offer any support. Russia and Ukraine signed a deal on Friday that would open up Ukrainian ports. There were skeptics out of the gate and now even more as Russia bombed Odessa Saturday morning. The strike didn’t appear to have damaged any grain storage, but it certainly doesn’t help build confidence that the agreement will stand. Technicals (September): Corn futures are rebounding this morning, erasing the losses from Friday’s session. Friday morning, we moved our bias from outright Neutral to Neutral/Bullish, aka cautiously optimistic. The Bulls want to see a conviction close out above our pivot pocket, 574 ¼-579 ¼, to help encourage additional upward momentum towards our resistance pocket, 586-589. Bias: Neutral/Bullish Previous Session Bias: Neutral/Bullish Resistance: 586-589****, 624-630***, 645-652 ½*** Pivot: 574 ¼-579 ¼ Support: 542 ¼-547 ¾*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZC1!
by OliverSloup_BlueLine
Wheat Futures Conoslidate Wheat Fundamentals: This morning’s weekly export sales report showed net sales of 511,100 metric tons (MT) for 2022/2023 were down 50 percent from the previous week and 10 percent from the prior 4-week average. Technicals: Wheat futures are holding their own this morning, relative to the pressure we are seeing in corn and beans. We mentioned in recent Tech Talks that this could be the case. Corn and wheat have retraced a large portion of their higher move from the beginning of the year, which may help prices enter into more of a consolidation phase, near term. Bias: Neutral Previous Session Bias: Neutral Resistance: 839-849**, 898 ½-903****, 960-970*** Pivot: 800-815 Support: 739-749*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZW1!
by OliverSloup_BlueLine
Corn Trades to Lowest Price Since the Start of the YearCorn Fundamentals: This morning’s weekly export sales report showed net sales of 33,900 MT for 2021/2022 were down 43 percent from the previous week and 82 percent from the prior 4-week average. -Net sales of 570,200 MT for 2022/2023 Techncials: Corn futures have broken below our 4-star support pocket from 586-589, taking out the lows from July 5th and 6th. This is now at the lowest trading level since January 24th. Our next support pocket is also being tested this morning, we've had that defined as 574 1/4-579 1/4. This level area was a big resistance area at the end of last year and beginning of this year. The RSI (relative strength index is at 30.8, a hair above what would be considered "oversold". Bias: Neutral Previous Session Bias: Neutral Resistance: 624-630***, 645-652 ½*** Pivot: 586-589 Support: 574 ¼-579 ¼*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZC1!
by OliverSloup_BlueLine
Will technical support hold? Corn Fundamentals: Yesterday’s weekly export inspections came in at 1,073,972 metric tons, right in line with what we saw for the same week last year, 1,076,668 metric tons. Yesterday’s crop progress report showed good/excellent conditions at 64%, unchanged from the previous week. Iowa leads the way with a rating of 81%. Illinois had the biggest weekly gain of +4%, that puts them at 70% G/E. 37% of the crop is silking. Technicals (September): Corn futures made a run at 4-star resistance yesterday but fizzled out and finished the day close to where we gaped higher on Sunday night. Futures are lower this morning as some forecasts improve. This has dropped prices within a stone’s throw of 4-star support, 586-589. Our bias remains in Neutral territory. We continue believe there will continue to be short term opportunities on both sides of the market as weather continues to have an implication on day-to-day gyrations. Bias: Neutral Previous Session Bias: Neutral Resistance: 627 3/4-631 3/4****, 645-652 ½***, 678 ¼-684 ½** Support: 586-589****, 574 ¼-579 ¼*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZC1!
by OliverSloup_BlueLine
Risk-On!It's a risk-on day in the outside markets with many sectors catching a tailwind on a softening U.S. dollar. Corn Commitments of Traders Update: Friday's CoT report showed Managed Money were net sellers of 21,693 contracts, shrinking their net long position to 151,174 contracts. Broken down, 16,972 was long liquidation and 4,721 were new shorts. Technicals: Corn futures opened higher and turned negative last night. That weakness has turned into strength this morning with a nice tailwind from a weaker U.S. dollar and in turn stronger commodity markets. The first meaningful resistance pocket for September futures doesn't come in until 627 3/4-631 3/4. Our bias was moved to neutral last week, stating our belief that there will be great opportunities for participants on both sides. If the market makes it to resistance, we would consider moving our short-term bias back into bearish territory. Bias: Neutral Previous Session Bias: Neutral Resistance: 627 3/4-631 3/4****, 645-652 ½***, 678 ¼-684 ½** Support: 586-589****, 574 ¼-579 ¼*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZC1!
by OliverSloup_BlueLine
Corn, Commitment of traders, US Dollar, and Corn open interest: An abundance of drivers influencing the Ag markets. Together the Funds and Commercials create a very liquid environment that trends up, down, or sideways. During certain times of extreme macro and/or fundamental influences their combined forces move away from a market looking for fair value to a market driven by fear. Fear can cause strong trending moves higher and lower. But when the marketplace is severely spooked, the funds and commercials seem to completely leave the markets and can do so for an extended period of time. The 95’ short crop caught a lot of HTA (hedge to arrive) bag holders off guard. The HTA debacle and the Rising US Dollar (dot com bust liquidity drain) spooked the market makers enough to drop Open Interest to a very low area from the late 90’s to mid 2000’s. This created a very unwelcoming market structure for corn trading mostly in the lower $2.00 area. I share this to illustrate just one example of how outside influences greatly affect Ag commodities. I hear a lot about recessions pulling money from stocks and into commodities. Sometimes that is the case, but scared money can sit on the sidelines for some time. Too much is going on in the world and capital flows are abnormal. I don’t know where any of these markets are going but it sure seems that for the moment money is moving to the sidelines in many markets…
CBOT:ZC1!
by mtb1980
1
Chop, ChopCorn Fundamentals: Consolidation continues to be the name of the game, which was actually encouraging yesterday morning when many other commodity markets were full on risk-off. To us, that indicated good underlying near term strength in the market as we inch closer to the weekend. Technicals (September): Not much has changed on the technical landscape over the last two and a half sessions. The market is continuing to linger near the middle of our support and resistance pockets. Our bias is outright neutral as we think there will continue to be short term trading opportunities for participants on both sides of the market. We would be looking to flip our bias into bearish territory against resistance and bullish territory against support. Bias: Neutral Previous Session Bias: Neutral Resistance: 624-630*, 645-652 ½, 678 ¼-684 ½ Support: 586-589, 574 ¼-579 ¼** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZC1!
by OliverSloup_BlueLine
BREAKOUT WATCHLive cattle futures are on the verge of a technical breakout, something that we've been rooting for for some time now. The cash market remains firm, and the charts are getting more constructive. Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CME:LEZ2022Long
by OliverSloup_BlueLine
Strong Dollar makes is tough on other marketsUS Dollar – Weekly continuous: Surpassed the Primary recover target at 102.25 and making highs not seen for 20 years. My opinion. Cash commodities can struggle to keep upward momentum when US Dollar is strong. The world is experiencing a financial crisis it has not seen for several decades. The 07/08 recession Primarily hit the US with the Housing market bust and Dollars fled the US to other stronger currencies/assets. US Ag commodities were very volatile in the period but mostly strong with a weak dollar. If EU and Asian markets remain weak, safe haven assets like the Dollar could remain elevated to extremely high…Yet to be determined. Open interest is/has been low in the commodity space, and we recently witnessed what a liquidity drain out of our markets from the big money can do. Major swings up and down to be expected in the nearby future.
ICEUS:DX1!
by mtb1980