Grain markets are under pressure in the early morning trade as Funds continue to grow their net short position
Corn
Technicals (March)
Corn futures failed against our pivot pocket from 450-452 last week which has marked another lower high and has brought sellers back into the market with prices now testing our first support pocket, 436 3/4-441. If the Bulls can defend this pocket potentially, we could see some consolidation and a near term double bottom, but the Bears remain in the driver’s seat until we can see consecutive closes back above our pivot pocket.
Bias: Neutral
Resistance: 460-462***
Pivot: 450-452
Support: 440-441**
Fundamental Headlines
(Bloomberg)
Brazil Summer Corn Harvest 15.3% Done as of Jan. 26.
Compares with 12.1% a year earlier and 5-year average of 10.2%, consulting firm Safras & Mercado says in report.
- Harvest is 32.5% done in Rio Grande do Sul state, 22.4% in Santa Catarina, 9.7% in Parana, 1.2% in Sao Paulo and 1.8% in Minas Gerais
- Work has not started in Mato Grosso do Sul, Goias, Distrito Federal and Mato Grosso
- Safras sees Brazil 2023/24 summer corn planted area at 3.972m hectares
Seasonal Tendencies
Below is a look at historical seasonal averages for March corn futures (updated each Monday) VS today’s prices (black line).
*Past performance is not necessarily indicative of futures results.
Commitment of Traders Snapshot
(updated on Mondays)
Friday’s Commitment of Traders report showed Managed Money (aka Funds) were net sellers of about 5k contracts, extending their net short position to 265,285. This was the fourth straight week of selling.
This is the largest net short position since June of 2020, which grew to just over 300k short positions. In the year prior, 2019, Funds amassed a net short position of nearly 350k contracts. So, as mentioned for the last few weeks; yes, Funds do have a massive net short position, but they still have room to add with not much of a catalyst to cover (for now).
Soybeans
Technicals (March)
Soybean futures failed against significant resistance near 1250 last week which marked another low high and has brought sellers back into the market, pressing prices lower overnight to make new lows for the move (11.98). If the Bulls can defend 1198-1203 through today’s session, potentially we could see an attempt at a double bottom. On the flipside, a failure to defend this pocket and a retest of the end of May/beginning of June lows would not be out of the question, that comes in near 1160.
Bias: Neutral
Resistance: 1250-1260***, 1282-1285***
Pivot: 1230-1235
Support: 1198-1203***
Fundamental Headlines
(Bloomberg)
Brazil 2023/24 Soy Harvest 11% Done as of Jan. 25: AgRural
Compares with 6% a week earlier and 5% a year before, according to an emailed report from consulting firm AgRural.
- Winter corn planting is 11% done in Center-South region, compared with 5% a week earlier and also 5% a year before
- Summer corn harvest is 12% complete in Center-South; it was at 8% a week earlier and at the same rate a year before
Concerns over Chinese economy grow. A Hong Kong court on Monday ordered the liquidation of property giant China Evergrande Group, dealing a fresh blow to confidence in the country’s fragile property market as policymakers step up efforts to contain a deepening crisis. -Reuters
Seasonal Tendencies
Below is a look at historical seasonal averages for March soybean futures VS this year’s price (black line), updated each Monday.
*Past performance is not necessarily indicative of futures results.
Commitment of Traders Snapshot
(updated on Mondays)
Managed Money (Funds) were net sellers of about 15k soybean contracts which extends their net short position to 91,842. Last week marked the 10th consecutive week that they were net sellers.
This is the largest net short position since 2020. In 2019, they grew their net short position to about 171k contracts. So as mentioned with corn, Funds are very short, but it’s far from a record short.
Wheat
Technicals (March)
March wheat futures are under pressure to start the week, taking out the lows from Friday afternoon. The Bulls will want to defend 595 3/4-600 through today’s session to prevent a further technical breakdown, with the next support pocket coming in from 573-578.
Bias: Neutral
Resistance: 608 1/2-611**, 618-622****
Pivot: 595 3/4-600
Support: 573-578***
Seasonal Tendencies
Below is a look at historical seasonal averages for March Chicago wheat futures VS this year’s price (black line), updated each Monday.
*Past performance is not necessarily indicative of futures results.
Commitment of Traders Snapshot
(updated on Mondays)
Friday’s Commitment of Traders report showed little change in the Managed Money net position. Funds are seen to be net short about 65k futures/options contracts.
Oliver Sloup, VP & Co-Founder, Blue Line Futures