Grain Prices are Mixed Ahead of USDA Supply and Demand Report

Grain prices are mixed in early North American trade on Wednesday. Prices experienced a turnaround Tuesday led by soybeans which were hammered on Monday. Looking ahead to the USDA monthly WASDE report Thursday will be wondering whether China taps its corn reserves, as opposed to purchasing it from the US on the open market.  Global demand for corn in 2018-19 should surpass  production, but China could generate relief by dippings into its own surplus.

Corn Prices

Corn prices edged higher early North-American trade on Wednesday. Prices are consolidating above the breakout level, and support is also seen near the 10-day moving average at 394. Resistance is seen near the May highs at 394.

Target resistance on corn is now seen near the July 2017 highs at 4.39.  Support is seen near the 10-day moving average at 3.92.  The uptrend remains intact, but short-term momentum is neutral which reflects the current price consolidation. The relative strength index (RSI) which is a momentum oscillator that measures accelerating and decelerating momentum, is moving sideways, and printing a reading of 60, which is in the middle of the neutral range and reflects consolidation.

Soybean Prices

Soybean prices are lower on Monday after closing on its lows on Friday. Prices appear to be range bound with support seen near an upward sloping trend line at 1003.  Resistance is seen near the 10-day moving average at 1032. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Hedge fund traders continued to add to long position in futures and options according to the latest commitment of trader’s report released for the date ending May 1, 2018.  According to the CFTC, managed money increased long positions in futures and options by 6.5K contracts while reducing short position by 647 contracts. Open interest that is long outnumber open interest that is short by 17-fold, which is offset by short position in soybean oil.

Wheat Prices

Wheat prices are down in early North American trade and trading just above support which is a former breakout level. This coincides with a downward sloping trend line that comes in near 510.  Additional support is seen near the 50-day moving average at 4.95. Resistance is seen near the 10-day moving average at 5.15. Positive momentum is decelerating as the  MACD (moving average convergence divergence) index is printing in the black with a declining trajectory which points to consolidation. The MACD is poised to generate a crossover sell signal, but will remain positive if price bounce. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal in overbought territory.