Daily Grains Analysis for February 22, 2018

Grain prices are higher again lead by soybean futures which continue to benefit from a dry weather forecast in South America.  Export activity slipped, falling 14% to 640 TMT for the 2017/18 season and was 13% below the prior 4-week average of 740 TMT.  Hedge fund traders significantly reduced short position in soybean futures in options in the latest week.  They also remain short wheat and are neutral on corn.

Corn Prices

Corn prices continue to consolidate.  Managed money in neutral as open interest in futures and options are flat, Support is seen near the 10-day moving average at 3.66 per bushel. The first level of target resistance is seen near the August highs at 3.75 per bushel. Momentum is neutral as the MACD (moving average convergence divergence) histogram is printing near the zero-index level with a flat trajectory which reflects consolidation.

Soybean Prices

Soybean prices whipsawed but are moving higher as hedge funds are now positioned for higher prices.  According to the latest commitment of trader’s report released for the date ending February 13, managed money reduced short position in futures and options by 37K which was near 50% of the total short open interest.  Open interest that is long futures and options outnumbers open interest that is short futures and options by 43K.

Support on soybeans is seen near a downward sloping trend line that comes in near 1010. 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 RSI (relative strength index) is moving higher reflecting accelerating positive momentum. The only caveat is the current reading of 71 is above the overbought trigger level of 70 and could foreshadow a correction.

Wheat Prices

Wheat prices dropped through support near the 10-day moving average at 4.56 which is now seen as resistance.  Support on wheat futures prices is seen near and upward sloping trend line near 4.44. Momentum is negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line( the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the MACD line).