Daily Grains Analysis for February 9, 2018

Farm revenue is expected to drop to lowest point since 2006 as borrowing costs are rising, and bumper crops are generating an abundance of supply. Soybeans were trading under pressure following the USDA’s report that showed a likely increase in ending stocks due to a decrease in exports for the balance of the 2017/2018 season. The USDA raised its 2017/18 US soybean carryout forecast by 60 million bushels to 530 million its monthly supply and demand projections. The increase in USDA’s carryout was larger than market expectations, which projected an increase of just 16 million bushels. The increase still leaves the USDA’s ending stocks 55 million bushels. USDA’s ending stocks represent 12.6% in reduced demand, which was an increase of about 1.6% from January.

Corn Prices

Corn prices reversed course on Friday in early trade after hitting a fresh 6-month high on Thursday. Support is seen near the 10-day moving average at 3.62 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

Soybean export sales for the 2017/18 were up 107% from last week and 5% more than the prior 4-week average.  Sales for the 2018/19 crop year slightly exceeded analyst estimates that ranged from 250 to 750 TMT.  Combined sales were up 83% week over week.  2017/18 export commitments are 75% of the USDA forecast. Major purchases were reported for China, the Netherlands, and Mexico.

Soybean prices appear to be consolidating.  Support on soybeans is seen near the February lows at 967. 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 sideways which reflects consolidation as it prints a reading of 52 which is in the middle of the neutral range.

Wheat Prices

Wheat prices moved lower in early trade Friday after hitting a 6-month high on Thursday but unable to hold on to elevated levels. Short-term support is seen near the 10-day moving average 4.50, 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 57 which is in the middle of the neutral range.