grains

Daily Grains Analysis – Soybeans Rebound as Hedge Funds Cover Short Positions

Grain prices initially moved lower but rebounded as the dollar gained back some of its gains. The latest USDA soybean export inspections came in ahead of analyst expectations, providing some relief after a weak open to the trading week, with corn about in-line and wheat shy of the average forecast. The 1.3M tons of beans was well ahead of even the most bullish forecast and helped halve earlier losses.

Corn  Prices

Corn prices are now nearly unchanged on the trading session after sliding during Asian and London hours. Corn is hovering near the 10-day moving average at 3.59 per bushel. The first level of target resistance is seen near the February highs at 3.59 per bushel. Support is seen near the former breakout level which is a horizontal trend line near 3.55 per bushel. Momentum is now neutral as the MACD (moving average convergence divergence) histogram prints near the zero index level with a flat trajectory which reflects consolidation.

Soybean Prices

Soybean prices rebounded from session lows on Tuesday, after dropping for 4-consecutive days on Monday.  Hedge funds appear to have covered a good portion of their short positions according to the latest commitment of trader’s report released for the date ending 1/30/18.  According to the CFTC, managed money reduced short position in futures and options by nearly 50K contracts while increasing long positions by 9K contracts. This reduced the net open interest in the managed money space to 22K contracts from 82K contracts, putting the market in equilibrium.

Support for soybeans is seen near the January lows at 944. Resistance is seen near the 10-day moving average at 986. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Wheat Prices

Wheat prices continued consolidated and bounced from session lows early on Tuesday. Support on wheat futures prices is seen near an upward sloping trend line that connects the lows in December to the lows in January and comes in near 4.35 per bushel. Resistance is seen near the 10-day moving average at 4.44. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).