Daily Grain Analysis – Soybeans Form Bull Flag Pattern, Corn and Wheat Trail

Daily Grain Analysis for January 24, 2018

Soybean meal remains in the limelight, surging higher against soybeans following this week’s National Oilseed Processing Administration’s report on the number of beans that were crushed. Corn and wheat prices remain stuck in a range, but the short position amassed by hedge funds could lead to a short squeeze in both products.

Corn Prices

Corn prices continue to consolidate trading sideways below resistance near 252.  A softer dollar will help buoy process despite the large harvest reported in November and December and the large yield expected from Brazil. According to the most recent CFTC report managed money is holding and open interest that is short futures and options by 227K contracts which is more than double and could generate a significant short squeeze.

Corn prices are attempting to form a bottom buoyed by the soft dollar. Support near the 10-day moving average at 3.50. Momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal.  The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Soybean Prices

Soybean prices remain buoyed as the crush (which is the spread between bean meal / bean oil and soybeans breaks out on robust bean meal demand. NOPA reported that the December crush of 166.4 million bushels which was the largest monthly total on record. The total was one million bushels above the previous record of 165.4 million bushels that was set in December 2014, one million bushels above market expectations.

Soybean prices are forming a bull flag pattern that is a pause that refreshes higher. Support is seen near the 10-day moving average at 9.67 per bushel.  Resistance for soybeans is seen near a downward sloping trend line that comes in near 10.10 per bushel. Momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal.  The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Wheat Prices

Wheat prices are trading sideways as large supplies and stable demand are capping the upside.  A weak dollar is helping to buoy wheat. According to the CFTC, futures positioning shows that managed money has open interest that is short futures and options with a net of 143K contracts which is more than double long positions and could generate a significant short squeeze.

Prices are hovering below the 10-day moving average at 4.24 per bushel which is seen as resistance. Momentum remains negative as the MACD (moving average convergence divergence) index prints in the red with a downward sloping trajectory which points to lower prices.