Grain markets ended the day mixed as traders positioned themselves ahead of the USDA’s World Agricultural Supply and Demand Estimates (WASDE) report due on Tuesday. Corn prices saw modest gains, supported by strong demand and concerns over South American production, while wheat prices declined due to profit-taking and a stronger dollar. Soybeans were relatively flat, with mixed signals from South American weather and ongoing tariff concerns. Overall, market activity was choppy, reflecting uncertainty around the USDA report and global trade dynamics.
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In this edition:
Harvest Headlines: Events impacting crop prices.
Technical Analysis: Price projections for corn based on our technical analysis.
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Market Overview
Harvest Headlines
Corn Market Highlights:
Strong Demand and Export Sales: Corn prices closed higher, supported by strong demand and a recent sale of 365,000 metric tons of U.S. corn to Mexico. Export inspections at 52.5 million bushels were in line with expectations, keeping pace with USDA forecasts.
South American Weather Concerns: Dry and hot conditions in Argentina raised concerns about production, with estimates suggesting a potential 1.5 million metric ton reduction in Argentine corn output. Brazil’s safrinha corn planting is also lagging, adding to supply worries.
Fund Positioning: Managed money (MM) funds were net buyers of corn, extending their long position to over 364,000 contracts, the largest since April 2022. Index funds also increased their long positions, signaling bullish sentiment.
USDA Report Expectations: Analysts expect the USDA to slightly lower U.S. corn ending stocks and potentially trim South American production estimates in the upcoming WASDE report.
Ethanol Futures Launch: The CME Group launched physically delivered ethanol futures and options, which could influence corn demand moving forward.
Soybeans Market Highlights:
Mixed Weather in South America: Brazil saw beneficial rains in some regions, but harvest progress remains slow, with only 15% of the crop harvested compared to 24% last year. Argentina received spotty rains, but more moisture is needed to support crop development.
Export Inspections and Demand: Soybean export inspections were strong at 38 million bushels, well above the 13 million needed weekly to meet USDA forecasts. China was the largest buyer, taking 20 million bushels.
Tariff Concerns: Ongoing uncertainty around President Trump’s proposed tariffs on steel and aluminum imports, as well as potential reciprocal tariffs, continues to weigh on soybean prices.
Record Soymeal Exports: U.S. soymeal export sales hit record highs, helping to reduce domestic supplies and providing some support to the soybean complex.
USDA Report Expectations: Analysts anticipate modest adjustments to U.S. soybean ending stocks, with potential reductions in South American production estimates due to weather-related challenges.
Wheat Market Highlights:
Profit-Taking and Dollar Strength: Wheat prices declined across all three classes, driven by profit-taking and a stronger U.S. dollar. KC wheat led the losses, down 7¼ cents.
Winterkill Concerns: Parts of the U.S. Plains are expected to face bitterly cold temperatures with limited snow cover, raising concerns about potential winterkill damage. However, the full extent of any damage won’t be known until crops emerge from dormancy.
Export Inspections: Wheat export inspections hit a four-month high at 20 million bushels, exceeding the 16 million needed weekly to meet USDA forecasts. The Philippines and the Dominican Republic were key buyers.
Black Sea Region Exports: Exports from Ukraine and Russia have slowed, with Russia’s grain export cap set to take effect soon. IKAR lowered its Russian wheat export forecast to 43 million metric tons, below the USDA’s estimate of 46 million.
USDA Report Expectations: Analysts expect minor adjustments to U.S. and global wheat ending stocks in the upcoming WASDE report, with potential revisions to Russia’s export outlook.
Technical Analysis of Soybean Prices on February 10, 2025:
The soybean market as of February 10, 2025, shows bullish tendencies with immediate resistance at $10.50 and $10.60, with a significant test at $10.70. Farmers should monitor these levels closely, particularly for volume spikes indicating a potential breakout or a failure at these resistances which might suggest taking profits or hedging positions.
Technical Indicators:
Moving Averages (MA):
20-day Moving Average (MA): $10.40. This acts as immediate support, indicating where recent price action has found buying interest.
50-day Moving Average (MA): Around $10.30, suggesting a longer-term trend support level.
200-day Moving Average (MA): Approximately $10.70, which serves as a significant resistance level. A close above this could signal a strong bullish trend continuation.
Relative Strength Index (RSI):
RSI (14-day): At 60, which indicates that soybeans are neither overbought nor oversold but are leaning towards being overbought. This suggests caution as the price might be due for a consolidation or minor pullback.
MACD (Moving Average Convergence Divergence):
MACD Line: The MACD line is above the signal line, which is generally bullish. However, the histogram is starting to compress, indicating that the bullish momentum might be waning.
Bollinger Bands:
Current Price: Positioned just below the upper Bollinger Band, which is around $10.70. The bands are moderately tight, suggesting lower volatility and potential for a breakout if volume increases.
Support and Resistance Levels:
Support Levels:
Short-term: $10.15 - This level has been tested and held recently, suggesting strong buying interest at this price point.
Medium-term: $10.40 (20-day MA).
Resistance Levels:
Immediate: $10.50 - A break above this could encourage more bullish sentiment.
Near-term: $10.60 - Breaking this could lead to further testing of higher levels.
Significant: $10.70 (200-day MA) - This is a psychological and technical barrier that, if broken, might propel prices higher.
Analysis:
Trend: The market shows a six-week upward trend on the daily chart, indicating that soybean bulls have the technical advantage in the near term. However, the RSI and MACD suggest that this momentum might be close to peaking, which could lead to either a consolidation phase or a slight correction.
Breakout Potential: With prices near the upper Bollinger Band and above key moving averages, there's potential for a breakout if supported by increased volume. The $10.60 level is crucial; a clear move above this could target the 200-day MA at $10.70, possibly extending to higher prices if momentum continues.
Risk of Reversal: If prices fail to maintain above the recent highs or if they dip below the $10.40 support (20-day MA), it might signal a reversal or at least a period of consolidation. The $10.15 level would then become critical to watch for further downside confirmation.
Volume: Volume has been rising, which supports the current uptrend. Continued or increased volume near resistance levels will be key for confirming any breakout.
Extended Commentary
Grain markets ended mixed as traders positioned ahead of the upcoming USDA WASDE report. Corn prices saw modest gains, supported by strong export demand and weather concerns in South America. A recent sale of U.S. corn to Mexico and managed money fund positioning added to the bullish sentiment, while ethanol futures' launch introduced a new variable for future demand. Analysts anticipate a slight reduction in U.S. and South American corn-ending stocks, the USDA report.
Soybeans mainly remained steady, with mixed signals from South American weather and tariff uncertainties. While Brazil received beneficial rains, its harvest remains behind schedule, and Argentina still faces moisture deficits. Vigorous export inspections and record U.S. soymeal sales provided support, but ongoing trade concerns and USDA’s production estimates kept the market cautious. Technical indicators suggest soybeans are approaching key resistance levels, with the potential for a breakout if buying momentum continues.
