Grain markets showed mixed performance, with corn prices rising on short-covering and technical buying, while soybeans faced pressure from fund selling and concerns over South American weather and demand. Wheat prices dipped slightly, with traders monitoring winter storm impacts in the U.S. Plains and Midwest, as well as global export competition. Overall, weather in South America, harvest progress in Brazil, and U.S. export demand remain key drivers for grain markets.
Ag Market Insights is dedicated to bringing you timely information to help you consistently get the most money for your crops. Our team painstakingly goes through mountains of information and data and distills insights into a format that you can consume in a few minutes.
In this edition:
Harvest Headlines: Events impacting crop prices.
Technical Analysis: Price projections for wheat based on our technical analysis.
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Market Overview
Harvest Headlines
Corn Market Highlights:
Corn prices rose 0.06 to 4.90¼, supported by short-covering and technical buying. The market is closely watching South American weather, particularly in Argentina and southern Brazil, where warm and dry conditions could impact second-crop corn planting.
Ethanol production dipped slightly to 1.082 million barrels per day, but remained above the pace needed to meet USDA forecasts. Ethanol stocks fell to a four-week low, signaling strong domestic demand.
Export demand remains robust, with unknown destinations purchasing 130,320 tons of U.S. corn for the 2024/25 marketing year. Brazil’s corn exports are also expected to rise, with ANEC projecting February exports at 10.1 million tons.
Brazil’s soybean harvest pace is critical for second-crop corn planting. Delays in soybean harvesting could push corn planting past the ideal window, potentially impacting yields.
Global corn stocks tightened, with declines primarily in China. However, stocks among major exporting countries remain steady at a four-year low, supporting prices.
Soybeans Market Highlights:
Soybean prices fell 0.15¾ to 10.27¾, pressured by fund selling and concerns over South American weather. Near-term forecasts show improved rainfall in Argentina, but irreversible damage from earlier heat and dryness may limit yield potential.
Brazil’s soybean harvest is progressing, but delays could push second-crop corn planting past the ideal window. CONAB’s updated outlook for Brazil’s crops is expected Thursday, with the USDA’s next report due March 11.
Export demand has slowed, with U.S. soybeans at a premium to competing origins. Unknown destinations purchased 120,000 tons of U.S. soybeans, but it remains unclear if China will be a significant buyer.
ANEC estimates Brazil’s February soybean exports at 10.1 million tons, up from 9.77 million last week. Soybean meal exports are also expected to rise to 1.93 million tons.
Soybean meal and oil prices declined on demand concerns. Tariffs and global trade dynamics remain a background issue, potentially impacting future export activity.
Wheat Market Highlights:
Wheat prices dipped slightly, with March CBOT wheat down 0.02¾ to 5.74¼. Traders are monitoring a winter storm and cold snap in the U.S. Plains and Midwest, which could pose winterkill risks to crops.
Snow cover in key wheat-growing regions is expected to provide insulation against the cold, mitigating some concerns about crop damage. However, bitterly cold temperatures remain a risk.
Global wheat stocks declined slightly, with a 3 million ton drop in China offsetting gains elsewhere. Stocks among major exporters rose to 14.1% of usage, up from 13.4% in January.
Russia’s grain export cap went into effect, raising questions about how much business the U.S. can capture. Argentina and Australia remain strong competitors in the global wheat market.
Development conditions in Europe, Russia, and Ukraine are being closely watched. The potential end to the Russia-Ukraine war could impact new crop planting and marketing, adding uncertainty to the market.
Corn Technical Analysis
The technical indicators suggest that corn prices are in a cautiously bullish phase in the short term. The position relative to the moving averages, combined with the RSI and MACD, points towards potential for further increases if the current momentum holds. However, key resistance at $4.72 should be watched closely as it could determine the near-term direction. If prices break this resistance, the next target could be the upper Bollinger Band at $4.80. Conversely, failure to maintain above $4.72 might see prices retreat to the lower Bollinger Band or the 100-day SMA at $4.35.
Moving Averages (MA):
50-day Simple Moving Average (SMA): $4.45
100-day SMA: $4.35
200-day SMA: $4.50
Analysis:
The price of corn is currently trading above both the 50-day and 100-day SMA but below the 200-day SMA. This suggests a short-term bullish trend within a longer-term bearish or consolidation phase. The crossover of the 50-day SMA above the 100-day SMA indicates momentum in the upward direction in the short term, but the price being below the 200-day SMA might signal caution for a more extended bullish trend.
Relative Strength Index (RSI):
Current RSI: 58
Analysis:
With an RSI of 58, corn is neither overbought nor oversold, residing comfortably in the middle of the scale. This indicates potential for continued upward movement without immediate signs of reversal due to exhaustion. However, if the RSI climbs towards 70, it might suggest corn is entering overbought territory, potentially leading to a price correction.
MACD (Moving Average Convergence Divergence):
MACD Line: $0.05
Signal Line: $0.03
MACD Histogram: +0.02
Analysis:
The MACD line is above the signal line, indicating bullish momentum. The positive histogram further supports this bullish signal. This could suggest that the recent upward movement in corn prices might continue, but traders should watch for any convergence or divergence that might signal a change in trend.
Bollinger Bands:
Upper Band: $4.80
Middle Band (20-day SMA): $4.55
Lower Band: $4.30
Analysis:
Corn prices are trading close to the middle band, indicating that the market is in a phase of consolidation. The bands are not currently wide, which might suggest lower volatility. A move towards the upper band could indicate strengthening bullish momentum, while touching or breaking below the lower band would signal potential bearish momentum.
Resistance Levels to Watch:
First Resistance: $4.72 - This level has been highlighted as significant due to recent price action, where it acted as a point of resistance where selling pressure could increase.
Second Resistance: $4.80 - This corresponds with the upper Bollinger Band, potentially acting as a cap to further upward movements in the short term.
Farmers should consider these levels in their marketing strategies, potentially looking to sell into strength near resistance levels or hold for further gains if the market breaks above these resistances.
Extended Commentary
Corn prices saw modest gains, buoyed by short-covering and strong export demand, particularly with 130,320 tons of U.S. corn booked for the 2024/25 marketing year. However, traders are closely monitoring South American weather, as delays in Brazil’s soybean harvest could push second-crop corn planting past the ideal window, potentially impacting yields. Meanwhile, ethanol production remains steady, with stocks falling to a four-week low, signaling strong domestic consumption and a supportive price tone. Global corn stocks are tightening, particularly in China, while stocks among major exporters remain at a four-year low, reinforcing a bullish market sentiment.
On the other hand, Soybeans faced pressure from fund selling and a slowdown in U.S. export demand as Brazilian shipments continued to increase. While Argentina’s forecast now includes improved rainfall, earlier drought damage may have already limited yield potential. Export activity remains focused, with Brazil's February soybean export projections rising to 10.1 million tons, reflecting strong global demand. However, weakening soybean oil and meal prices have weighed on the market, as concerns over trade tariffs and shifting global consumption trends continue to add uncertainty.
Wheat markets remained on the defensive, with March CBOT wheat dipping slightly amid a lack of bullish catalysts. While a winter storm and cold snap across the U.S. Plains and the Midwest raised concerns about potential winterkill, adequate snow cover in key growing regions is expected to mitigate significant damage. Global supply shifts remain in play, with Russia's newly implemented grain export cap creating market uncertainty. Still, competition from Argentina and Australia keeps U.S. wheat exports under pressure. Looking ahead, traders will watch any developments in global production regions, particularly in Europe and the Black Sea, for signs of tightening supplies or shifts in trade flows.
