---

Wednesday morning, before the wheat rally really kicked off, we moved our bias to outright Bullish, sighting relative strength versus corn and beans and a risk off trade in other markets such as crude oil. The relative strength showed signs of exhaustion in our eyes.  Knowing that the Funds have been holding their largest net short position in over five years has also been living in the back of our mind.  Friday's weekly Commitment of Traders report showed Funds holding 126,324 futures/options contracts short in the wheat market.  Broken down that is 58,776 longs VS 185,100 shorts.  Below is an illustration of how that stacks up with historical Fund positioning.  The yellow line represents the net position going back to 2006.  With such a large net short position comes a risk of a high velocity short covering rally.

Below is an updated daily chart of July Chicago wheat.  In Thursday's interview with RFD-TV (watch now: Short Covering Continues in Wheat - Blue Line Futures) and in our morning reports, we talked about 665-670 being an important pocket to keep an eye on.  This pocket represetnts previously important price points including significant support thourhg March and the first half of April.  A close back above this pocket could spur additional short covering twoards 715(ish), which represents the upper end of the range since March.  

---

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

Grains

Like this post? Share it below:

Back to Insights