Daily Grains Analysis for March 20, 2018 – Corn and Wheat Tumble Through Support

Grain prices rebounded on Tuesday after breaking down on Monday.  Corn prices were hammered as hedge fund liquidated positions following a week where they significantly added to long position and reduce short position in futures and options. Managed money is offsides in all three major grain categories, leaving the market vulnerable for a further slide in prices.

Corn Prices

Corn prices broke down through support near an upward sloping trend line that comes in near 3.765 which is now seen as resistance. Additional resistance is seen near the 10-day moving average at 382.1.  The first level of support is seen near the 50-day moving average at 365. Momentum has turned negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal.  The MACD histogram is printing in the red with a down sloping trajectory which points to lower prices. The RSI has come from overbought territory to neutral territory as it moves lower reflecting accelerating negative momentum.

Soybean Prices

NOPA data showed that crush demand moved lower from January, but was record setting production for the month of February, up 7.7% from Feb 2017.  Export activity for the week was down 49% from the prior week but 30% more than the prior 4-week average.  2018/19 export sales were 77.4 TMT.  Combined season sales were down 49% week over week.    Total export commitments are 88% of projections with 25 weeks to go and need to average 277 TMT in weekly sales to meet forecast. Current export sales are 8% behind last year’s pace.

Soybean prices broke down through trend line support on Monday and are consolidating in early trade on Tuesday. Prices are poised to test the 50-day moving average which is seen as target support near 1007.  Resistance is seen near the breakdown level at 1029 and then the 10-day moving average at 1037. Negative momentum has accelerated as the MACD (moving average convergence divergence) index prints in the red with a declining trajectory which points to lower prices.

Wheat Prices

Wheat prices broke down trough trend line support which was former resistance now resistance again at 454.  Prices are now down for 4-consecutive trading session. Target support is seen near the February lows at 440. Momentum has turned negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal.  The MACD histogram is printing in the red with a down sloping trajectory which points to lower prices.