Daily Grains Analysis – Prices Consolidate After Breaking Higher

Grain prices corrected early in North American trade, after rallying again 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.  Export sales in wheat were stronger than expected but this was not the same for corn sales.

Corn Prices

Weekly corn export sales for the 2017/18 marketing season of 1,769.6 TMT were down 4% from the week prior but 26% more than the prior 4-week average. There were no new crop sales, leaving combined sales at 1,769.6 TMT.  Total sales were within analyst expectations that ranged from 1,000 to 2,050 TMT. Increases were reported for South Korea, Egypt, and Spain. 2017/18 export commitments are 70% of the USDA forecast and need to average 496 TMT per week to meet projections. Export sales trail last year’s pace by 17%.

Corn prices closed off their highs Tuesday after testing resistance. Support is seen near the 10-day moving average at 3.636 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, breaking through trend line resistance.  Support on soybeans is seen near the 10-day moving average at 989.5. Resistance is seen near the December highs at 1015. 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.

Wheat Prices

Wheat export sales for the 2017/18 marketing year totaled 393,400 metric tons, up 36% from last week and 67% more than the prior 4-week average. New crop sales totaled 22.1 TMT, lifting total sales to 415.5 TMT. Combined sales were up 43% from last week and were within analyst expectations that ranged from 300 to 500 TMT.

Wheat prices closed near their lows Tuesday and gapped down on Wednesday in early trade. Short-term support is seen near the 10-day moving average 4.53, and then an update sloping trend line at 4.48. Resistance is seen near the February highs at 4.67. 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.