Daily Grains Analysis for February 13, 2018

Grain prices moved higher on Monday and continued to consolidate at elevated levels on Tuesday. The CFTC reported that money managers cut their net short position in nearly all grains which led to a further short squeeze higher.  Concerns about dry weather in Argentina and the southern Plains helped spark the change, though a recent USDA report suggested to some that ample domestic supplies of wheat and soybeans would continue to weigh on prices.

Corn Prices

The latest commitment of trader’s report released for the date ending February 6, 2018, showed that managed money reduced short positions in futures and options by 37K contracts while increase long position by 10K. The net open interest is still short corn in the managed money space, by it has been reduced to 83K from 153K.

Corn prices closed on their highs Monday and are poised to test resistance. Support is seen near the 10-day moving average at 3.633 per bushel. The first level of target resistance is seen near the August highs at 3.75 per bushel. Additional resistance is seen near the 2017 highs at 3.94. Momentum is accelerating higher as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The MACD also just generated a crossover buy signal.

Soybean Prices

Export activity in soybeans improved, rising 107% to 743 TMT for 2017/18 sales, and was 5% above the prior 4-week average of 706 TMT.  Total export commitments are 75% of projections with 30 weeks to go and need to average 484 in weekly sales to meet forecast. Current export sales are 13% behind last year’s pace.

Soybean prices rallied on robust short covering.  Support on soybeans is seen near the 10-day moving average at 987. Resistance is seen near the downward sloping trend line at 1008. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which points to consolidation. The RSI (relative strength index) is moving higher with price action reflecting accelerating positive momentum.

Wheat Prices

Wheat prices closed on their highs on Monday and attempted to pierce through resistance on Thursday. Prices are forming a triangle pattern as energy is stored weighing for a breaking out. Short-term support is seen near the 10-day moving average 4.526, and then an update sloping trend line at 4.48. Resistance is seen near a downward sloping trend line that comes in near 4.62. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which points to consolidation. The RSI (relative strength index) is moving sideways which reflects consolidation as it prints a reading of 62.5 which is in the middle of the neutral range.