grains

Daily Grains Analysis – Wheat and Corn Surge, Soybeans Trail

Grain prices are continuing to move higher as the short-squeeze continues, led by wheat prices. The dollar lost ground on Tuesday, paving the way for higher commodity prices. The most recent commitment of trader’s report shows that short covering is accelerating, as hedge funds are short the entire grain complex.  Hot and dry weather is expected to cover most of Argentina over the next 2-week period which could reduce production and add to the concerns over supply.

Corn Prices

Despite a decline in short position report by the commitment of trader’s report released for the date ending January 23, 2018, the open interest in short positions in corn in the managed money space is more than double the long positions. With more than 427K short futures and options, there is a lot of room to run before hedge funds cover their positions.

Corn prices continue breaking out, moving away from trend line resistance that now supports near 3.55 per bushel. Support is seen near the 10-day moving average at 3.53. Resistance is seen near the August highs at 3.76. Momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal.  The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Soybean Prices

Soybean prices are trailing and while they are rallying, bean prices are grinding higher. Hedge funds reduced the short position in futures and options according to the latest commitment of trader’s report.  Despite the 18K reduction in short positions, the open interest is more than the double long position which means there is a lot of room for prices to climb before managed money covers their short positions.

Soybean prices are slightly higher Tuesday. Support is seen near the 10-day moving average at 984 per bushel.  Resistance for soybeans is seen near a downward sloping trend line that comes in near 10.05 per bushel. Momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal.  The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

Wheat Prices

Wheat prices are surging higher up more than 1.4% early in North American trade. Open positions that are short futures and options are nearly 3-times the number of long position in futures and options for those that are categorized as managed money.

Wheat prices are poised to test the August highs at 4.62. A break of this level could lead to a test of the July highs at 5.55. Support is seen near the 10-day moving average at 4.33. Momentum has turned positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.