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A Friendly WASDE Report Sparks Optimism in Grain Markets

Grain Express

/ by BlueLineFutures | Leave a comment

Grain markets received friendly news from the USDA on Tuesday which renewed optimism, specifically in corn. Is there more upside to come?

December WASDE – A Win for Corn Bulls

The December WASDE report sent nearby March corn futures rallying to multi-week highs following a surprise cut in ending stocks and bolstered domestic export projections.

Read our WASDE Recap

Corn


Tuesday’s Recap
March Corn futures finished the day at a one month high of 449’0 Tuesday, up by 7’2 or 1.64%. Total volume was a heavy 517,220, with the March contract seeing 296,082 change hands. Overall open interest gained 26,476, or 1.70%, with March higher by 6,031 (0.75%) to 804,874.

Technicals
March corn futures got the report it needed to breakout above trendline resistance, that took prices right to our next pocket, 447 3/4-452 1/4. This will be an extremely important pocket to keep an eye on through this week’s trade. A clean breakout above here and the market appears to have a fairly clear runway for higher prices. A failure here likely takes us to retest what was just resistance, now support, from 441 3/4-442 1/4. A failure there could spur additional profit taking from the recent higher. The chart and money flow continues to be constructive, along with seasonals and now a few bullish tailwinds.

Technical Levels of Importance
Resistance: 441 3/4-442 1/4***, 447 3/4-452 1/4****
Pivot: 434-437 1/2
Support:425 1/2-428***, 423 1/4**, 414-416 3/4****


Fundamental Notes
U.S. farmers and grain handlers will have less corn than expected in storage before next year’s harvest as exports rise to the second-highest level on record, the U.S. Department of Agriculture said on Tuesday. U.S. corn ending stocks for 2024-25 are projected at 1.738 billion bushels, down from 1.938 billion in November, USDA said in the monthly report. Analysts expected 1.906 billion. USDA raised its estimate for 2024-25 corn exports to 2.475 billion bushels, compared with its November estimate for 2.325 billion bushels. It also increased its forecast for how much corn will be used to produce ethanol. -Reuters
China cuts 2024/25 corn production forecast in December outlook. China’s agriculture ministry lowered its forecasts for corn production for the 2024/25 crop year in its December outlook released on Tuesday. It estimated corn output at 293.84 million metric tons, down from 297.01 million tons in a previous forecast. -Reuters


Popular Options
The March 420 put saw the most traded with 11,067 contracts changing hands. Option open interest is greatest for the March 450 calls at 43,111, and the March 420 puts at 29,198.

Volatility Update
As measured by CVL, implied volatility finished the session moderately lower, down 0.44 to end the day at 16.16. The 30-day historical volatility finished the day higher by 0.41% to 17.05%. The CVL Skew ended the session moderately down, off 0.12 to finish at 1.47.

Seasonal Tendencies Update
(Updated on 12.9.24)

Below is a look at historical price averages for March corn futures on a 5, 10, 15, 20, and 30 year time frames (Past performance is not necessarily indicative of future results). Historically, December has been a favorable month for prices. Whether or not that stays on trend this year or not is still to be seen.

Commitment of Traders Update

(Updated on 12.9.24)

Friday’s Commitment of Traders report showed Funds were net sellers of roughly 9.2k futures/options contracts, shrinking their net long position to 88,220.

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Futures trading involves a 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 your identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500

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Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.

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