Wheat Futures Climb Out of a Hole

Research Posts Grain Express

/ | Leave a comment

Yesterday’s USDA report pressured corn and soybeans, but wheat futures were able to stage an impressive reversal higher which has led to additional strength in the early morning trade.

USDA Report Estimates 

Scheduled to be released today at 11am CT.

Corn

News

  • Hot and dry conditions throughout the grain belt in the back half of summer raised concerns over potential yield declines from some analysts, which was validated to some extent in this report with the USDA cutting yields for both corn and soybeans.  The USDA showed a national average corn yield at 173.8 bushels per acre, down from the 175.1 bushels per acre that we saw in last month’s report.  Despite a lower yield, production was up slightly from last month due to an increases in harvested acres.  There weren’t any significant changes on the demand side of the equation, putting US Ending stocks at a lofty 2.22 billion bushels, which was above the average analyst estimate.
  • With this report behind us and weather uncertainty having a diminishing impact on yield potential, we’ve seen corn and soybean CVOL steadily declining since mid-summer, reaching their lowest levels since last spring.  Lower volatility may make options more affordable and attractive for those looking to manage risk or to express an opinion in the market. 

Technicals (December)

Corn futures broke lower following the release of yesterday’s USDA report, taking prices back near the low end of the range from the last month.  So far, the Bulls have been able to defend our 4-star support pocket from 472-476.  A break and close below there could accelerate the selling pressure.  The Bulls want to see consecutive closes back above 489-491 to encourage further technical momentum.  Until then, we believe this is an environment filled with short term opportunities for participants on both sides of the market.

Bias: Neutral

Resistance: 497 1/2**, 502-506 1/2***, 518-525 3/4****

Pivot:  489-491

Support:  472-476****, 460-464 1/2**

Seasonal Tendencies

Below is a look at seasonal averages for December corn.  The 5-year seasonal average (red line in chart below) suggests that the recent consolidation could start to turn into a market bottom.  Longer term moving averages on the other hand suggest more weakness in the back half of September. 

Soybeans 

News

  • Soybeans saw yield decline 8/10ths of a bushel from last month, coming in at 50.1 bushels per acre.  Harvested acres were increased only slightly which kept overall production estimates below last month’s report.  Soybean ending stocks were reported within the range of analyst expectations.
  •  With this report behind us and weather uncertainty having a diminishing impact on yield potential, we’ve seen corn and soybean CVOL steadily declining since mid-summer, reaching their lowest levels since last spring.  Lower volatility may make options more affordable and attractive for those looking to manage risk or to express an opinion in the market.

Technicals (November)

In yesterday’s morning report we noted: “Despite the bullish headlines, we are cautious on beans from these levels as well as from a seasonality standpoint. “.  November soybean futures broke below trendline support and the 50-day moving average yesterday which keeps the door open for further technical declines, which also aligns with historical weakness during this time of year.  The next support pocket we are eyeing comes in from 1330-1332 1/2.  The Bulls need to reclaim ground above 1350-1355 on a closing basis to neutralize yesterday’s technical damage. 

Bias: Bearish/Neutral

Resistance: 1373-1381***, 1390 1/2-1392**

Pivot: 1350-1355

Support: 1330-1332 1/2***

Seasonal Tendencies

Below is a look at seasonal averages for November soybeans.  Seasonal tendencies have shown weakness through the back half of September for the 5, 10, 15, 20, and 30 year averages, illustrated in the chart below.

Wheat

News

Chicago wheat is on the rise for a second session on Wednesday to extend a rebound from a 33-month low as a lower-than-expected forecast of world supply by the U.S. government shifted attention towards harvest risks in some exporting countries.

Technicals (December)

Yesterday’s reversal off the low was encouraging to see for those who are tilted in the Bullish direction.  That reversal has taken prices back into our pivot pocket from 595-599 1/2.  If the Bulls can chew through and close above this pocket, the next target would be 612-616.  Consecutive closes above that pocket would likely be the catalyst to spark a bigger short covering rally. 

Bias: Neutral/Bullish

Resistance: 612-616****, 643 1/2-646 1/4****

Pivot: 595-599 1/2 

Support: 585-587, 507**

Seasonal Tendencies

Below is a look at seasonal averages for December Chicago wheat.  We are inching closer to a seasonal low (based on historical tendencies).  Will that play out again this year? TBD.


Sign up for a 14-day, no-obligation free trial of our proprietary research with actionable ideas! Free Trial Start Trading with Blue Line Futures Subscribe to our YouTube Channel
Email info@Bluelinefutures.com or call 312-278-0500 with any questions -- our trade desk is here to help with anything on the board!

Futures trading involves substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. 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.

Blue Line Futures is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets. Therefore, carefully consider whether such trading is suitable for you considering your financial condition.

With Cyber-attacks on the rise, attacking firms in the healthcare, financial, energy and other state and global sectors, Blue Line Futures wants you to be safe! Blue Line Futures will never contact you via a third party application. Blue Line Futures employees use only firm authorized email addresses and phone numbers. If you are contacted by any person and want to confirm identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500





© 2022 by Blue Line Futures, LLC. All rights reserved.
Futures trading involves substantial risk of loss and may not be suitable for all investors.

Privacy Policy Illustration by Freepik Storyset

Get in touch with us today.
Press the contact us button to reach out to us or take a look at our social media pages.

Contact Us


Futures trading involves substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. 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.

Blue Line Futures is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets. Therefore, carefully consider whether such trading is suitable for you considering your financial condition.

With Cyber-attacks on the rise, attacking firms in the healthcare, financial, energy and other state and global sectors, Blue Line Futures wants you to be safe! Blue Line Futures will never contact you via a third party application. Blue Line Futures employees use only firm authorized email addresses and phone numbers. If you are contacted by any person and want to confirm identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500

To top